Correlation Between EGalaxeMPIA Technology and Sitronix Technology

Can any of the company-specific risk be diversified away by investing in both EGalaxeMPIA Technology and Sitronix Technology 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 EGalaxeMPIA Technology and Sitronix Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between eGalaxeMPIA Technology and Sitronix Technology Corp, you can compare the effects of market volatilities on EGalaxeMPIA Technology and Sitronix Technology 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 EGalaxeMPIA Technology with a short position of Sitronix Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of EGalaxeMPIA Technology and Sitronix Technology.

Diversification Opportunities for EGalaxeMPIA Technology and Sitronix Technology

0.42

Correlation Coefficient

EGalaxeMPIA Technology  Sitronix Technology

Very weak diversification

The 3 months correlation between EGalaxeMPIA and Sitronix is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding eGalaxeMPIA Technology and Sitronix Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitronix Technology Corp and EGalaxeMPIA Technology 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 eGalaxeMPIA Technology are associated (or correlated) with Sitronix Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitronix Technology Corp has no effect on the direction of EGalaxeMPIA Technology i.e., EGalaxeMPIA Technology and Sitronix Technology go up and down completely randomly.

Pair Corralation between EGalaxeMPIA Technology and Sitronix Technology

Assuming the 90 days trading horizon eGalaxeMPIA Technology is expected to under-perform the Sitronix Technology. But the stock apears to be less risky and, when comparing its historical volatility, eGalaxeMPIA Technology is 1.55 times less risky than Sitronix Technology. The stock trades about -0.36 of its potential returns per unit of risk. The Sitronix Technology Corp is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  21,700  in Sitronix Technology Corp on October 22, 2024 and sell it today you would lose (1,000.00) from holding Sitronix Technology Corp or give up 4.61% of portfolio value over 90 days.

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

eGalaxeMPIA Technology  vs.  Sitronix Technology Corp

eGalaxeMPIA Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days eGalaxeMPIA Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Sitronix Technology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sitronix Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with EGalaxeMPIA Technology and Sitronix Technology

The main advantage of trading using opposite EGalaxeMPIA Technology and Sitronix Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EGalaxeMPIA Technology position performs unexpectedly, Sitronix Technology 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 Sitronix Technology will offset losses from the drop in Sitronix Technology's long position.

The idea behind eGalaxeMPIA Technology and Sitronix Technology Corp 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.

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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.