Correlation Between SICC and HanS Laser

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

By analyzing existing cross correlation between SICC Co and HanS Laser Tech, you can compare the effects of market volatilities on SICC and HanS Laser 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 SICC with a short position of HanS Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of SICC and HanS Laser.

Diversification Opportunities for SICC and HanS Laser

0.54

Correlation Coefficient

SICC  HanS Laser

Very weak diversification

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

Pair Corralation between SICC and HanS Laser

Assuming the 90 days trading horizon SICC Co is expected to under-perform the HanS Laser. In addition to that, SICC is 1.37 times more volatile than HanS Laser Tech. It trades about -0.02 of its total potential returns per unit of risk. HanS Laser Tech is currently generating about 0.01 per unit of volatility. If you would invest  2,559  in HanS Laser Tech on October 4, 2024 and sell it today you would lose (59.00) from holding HanS Laser Tech or give up 2.31% of portfolio value over 90 days.

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

SICC Co  vs.  HanS Laser Tech

SICC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SICC Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

HanS Laser Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HanS Laser Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HanS Laser is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SICC and HanS Laser

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

The idea behind SICC Co and HanS Laser Tech 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.