Correlation Between Simplo Technology and Macauto Industrial

Can any of the company-specific risk be diversified away by investing in both Simplo Technology and Macauto 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 Simplo Technology and Macauto Industrial 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 Macauto Industrial Co, you can compare the effects of market volatilities on Simplo Technology and Macauto 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 Simplo Technology with a short position of Macauto Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplo Technology and Macauto Industrial.

Diversification Opportunities for Simplo Technology and Macauto Industrial

-0.67

Correlation Coefficient

Simplo Technology  Macauto Industrial

Excellent diversification

The 3 months correlation between Simplo and Macauto is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Simplo Technology Co and Macauto Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macauto Industrial 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 Macauto Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macauto Industrial has no effect on the direction of Simplo Technology i.e., Simplo Technology and Macauto Industrial go up and down completely randomly.

Pair Corralation between Simplo Technology and Macauto Industrial

Assuming the 90 days trading horizon Simplo Technology Co is expected to generate 1.38 times more return on investment than Macauto Industrial. However, Simplo Technology is 1.38 times more volatile than Macauto Industrial Co. It trades about 0.12 of its potential returns per unit of risk. Macauto Industrial Co is currently generating about 0.09 per unit of risk. If you would invest  38,000  in Simplo Technology Co on October 26, 2024 and sell it today you would earn a total of  1,950  from holding Simplo Technology Co or generate 5.13% return on investment over 90 days.

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

Simplo Technology Co  vs.  Macauto Industrial Co

Simplo Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Simplo Technology Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Simplo Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Macauto Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macauto Industrial Co 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 Simplo Technology and Macauto Industrial

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

The idea behind Simplo Technology Co and Macauto Industrial Co 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.