Correlation Between PIE Industrial and Sanichi Technology

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

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

Diversification Opportunities for PIE Industrial and Sanichi Technology

-0.06

Correlation Coefficient

PIE Industrial  Sanichi Technology

Good diversification

The 3 months correlation between PIE and Sanichi is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding PIE Industrial Bhd and Sanichi Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanichi Technology Bhd and PIE Industrial 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 PIE Industrial Bhd are associated (or correlated) with Sanichi Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanichi Technology Bhd has no effect on the direction of PIE Industrial i.e., PIE Industrial and Sanichi Technology go up and down completely randomly.

Pair Corralation between PIE Industrial and Sanichi Technology

Assuming the 90 days trading horizon PIE Industrial is expected to generate 12.28 times less return on investment than Sanichi Technology. But when comparing it to its historical volatility, PIE Industrial Bhd is 21.09 times less risky than Sanichi Technology. It trades about 0.13 of its potential returns per unit of risk. Sanichi Technology Bhd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Sanichi Technology Bhd on September 23, 2024 and sell it today you would lose (2.00) from holding Sanichi Technology Bhd or give up 13.33% of portfolio value over 90 days.

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

PIE Industrial Bhd  vs.  Sanichi Technology Bhd

PIE Industrial Bhd

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PIE Industrial Bhd are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, PIE Industrial disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sanichi Technology Bhd

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sanichi Technology Bhd are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Sanichi Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PIE Industrial and Sanichi Technology

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

The idea behind PIE Industrial Bhd and Sanichi Technology Bhd 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.