Correlation Between SI TECH and Industrial

Can any of the company-specific risk be diversified away by investing in both SI TECH and Industrial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SI TECH and Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SI TECH Information Technology and Industrial and Commercial, you can compare the effects of market volatilities on SI TECH and Industrial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in SI TECH with a short position of Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SI TECH and Industrial.

Diversification Opportunities for SI TECH and Industrial

-0.3

Correlation Coefficient

SI TECH  Industrial

Very good diversification

The 3 months correlation between 300608 and Industrial is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding SI TECH Information Technology and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial and SI TECH is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on SI TECH Information Technology are associated (or correlated) with Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of SI TECH i.e., SI TECH and Industrial go up and down completely randomly.

Pair Corralation between SI TECH and Industrial

Assuming the 90 days trading horizon SI TECH Information Technology is expected to generate 3.72 times more return on investment than Industrial. However, SI TECH is 3.72 times more volatile than Industrial and Commercial. It trades about 0.03 of its potential returns per unit of risk. Industrial and Commercial is currently generating about 0.1 per unit of risk. If you would invest  824.00  in SI TECH Information Technology on October 4, 2024 and sell it today you would earn a total of  264.00  from holding SI TECH Information Technology or generate 32.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SI TECH Information Technology  vs.  Industrial and Commercial

SI TECH Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SI TECH Information Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Industrial and Commercial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SI TECH and Industrial

The main advantage of trading using opposite SI TECH and Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SI TECH position performs unexpectedly, Industrial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Industrial will offset losses from the drop in Industrial's long position.

The idea behind SI TECH Information Technology and Industrial and Commercial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.