Correlation Between Sercomm Corp and Planet Technology

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

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

Diversification Opportunities for Sercomm Corp and Planet Technology

-0.63

Correlation Coefficient

Sercomm Corp  Planet Technology

Excellent diversification

The 3 months correlation between Sercomm and Planet is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sercomm Corp and Planet Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Technology and Sercomm Corp 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 Sercomm Corp are associated (or correlated) with Planet Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Technology has no effect on the direction of Sercomm Corp i.e., Sercomm Corp and Planet Technology go up and down completely randomly.

Pair Corralation between Sercomm Corp and Planet Technology

Assuming the 90 days trading horizon Sercomm Corp is expected to generate 2.73 times more return on investment than Planet Technology. However, Sercomm Corp is 2.73 times more volatile than Planet Technology. It trades about 0.06 of its potential returns per unit of risk. Planet Technology is currently generating about -0.04 per unit of risk. If you would invest  12,250  in Sercomm Corp on October 23, 2024 and sell it today you would earn a total of  350.00  from holding Sercomm Corp or generate 2.86% return on investment over 90 days.

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

Sercomm Corp  vs.  Planet Technology

Sercomm Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sercomm Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sercomm Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Planet Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Planet Technology 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 Sercomm Corp and Planet Technology

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

The idea behind Sercomm Corp and Planet Technology 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.