Correlation Between Simplo Technology and Hiwin Mikrosystem

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

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

Diversification Opportunities for Simplo Technology and Hiwin Mikrosystem

-0.54

Correlation Coefficient

Simplo Technology  Hiwin Mikrosystem

Excellent diversification

The 3 months correlation between Simplo and Hiwin is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Simplo Technology Co and Hiwin Mikrosystem Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiwin Mikrosystem Corp and Simplo 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 Simplo Technology Co are associated (or correlated) with Hiwin Mikrosystem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiwin Mikrosystem Corp has no effect on the direction of Simplo Technology i.e., Simplo Technology and Hiwin Mikrosystem go up and down completely randomly.

Pair Corralation between Simplo Technology and Hiwin Mikrosystem

Assuming the 90 days trading horizon Simplo Technology Co is expected to generate 0.6 times more return on investment than Hiwin Mikrosystem. However, Simplo Technology Co is 1.68 times less risky than Hiwin Mikrosystem. It trades about -0.02 of its potential returns per unit of risk. Hiwin Mikrosystem Corp is currently generating about -0.08 per unit of risk. If you would invest  39,400  in Simplo Technology Co on December 30, 2024 and sell it today you would lose (1,300) from holding Simplo Technology Co or give up 3.3% of portfolio value over 90 days.

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

Simplo Technology Co  vs.  Hiwin Mikrosystem Corp

Simplo Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simplo Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Simplo Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Hiwin Mikrosystem Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hiwin Mikrosystem Corp 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Simplo Technology and Hiwin Mikrosystem

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

The idea behind Simplo Technology Co and Hiwin Mikrosystem 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..