Correlation Between Voltronic Power and Simple Mart

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

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

Diversification Opportunities for Voltronic Power and Simple Mart

0.03

Correlation Coefficient

Voltronic Power  Simple Mart

Significant diversification

The 3 months correlation between Voltronic and Simple is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Voltronic Power Technology and Simple Mart Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simple Mart Retail and Voltronic Power 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 Voltronic Power Technology are associated (or correlated) with Simple Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simple Mart Retail has no effect on the direction of Voltronic Power i.e., Voltronic Power and Simple Mart go up and down completely randomly.

Pair Corralation between Voltronic Power and Simple Mart

Assuming the 90 days trading horizon Voltronic Power Technology is expected to under-perform the Simple Mart. In addition to that, Voltronic Power is 3.91 times more volatile than Simple Mart Retail. It trades about -0.11 of its total potential returns per unit of risk. Simple Mart Retail is currently generating about -0.08 per unit of volatility. If you would invest  4,130  in Simple Mart Retail on September 25, 2024 and sell it today you would lose (105.00) from holding Simple Mart Retail or give up 2.54% of portfolio value over 90 days.

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

Voltronic Power Technology  vs.  Simple Mart Retail

Voltronic Power Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voltronic Power 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Simple Mart Retail

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Voltronic Power and Simple Mart

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

The idea behind Voltronic Power Technology and Simple Mart Retail 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.