Correlation Between PIE Industrial and SFP Tech

Can any of the company-specific risk be diversified away by investing in both PIE Industrial and SFP Tech 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 SFP Tech 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 SFP Tech Holdings, you can compare the effects of market volatilities on PIE Industrial and SFP Tech 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 SFP Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIE Industrial and SFP Tech.

Diversification Opportunities for PIE Industrial and SFP Tech

0.87

Correlation Coefficient

PIE Industrial  SFP Tech

Very poor diversification

The 3 months correlation between PIE and SFP is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding PIE Industrial Bhd and SFP Tech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFP Tech Holdings 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 SFP Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFP Tech Holdings has no effect on the direction of PIE Industrial i.e., PIE Industrial and SFP Tech go up and down completely randomly.

Pair Corralation between PIE Industrial and SFP Tech

Assuming the 90 days trading horizon PIE Industrial Bhd is expected to generate 0.77 times more return on investment than SFP Tech. However, PIE Industrial Bhd is 1.29 times less risky than SFP Tech. It trades about -0.18 of its potential returns per unit of risk. SFP Tech Holdings is currently generating about -0.32 per unit of risk. If you would invest  603.00  in PIE Industrial Bhd on December 29, 2024 and sell it today you would lose (211.00) from holding PIE Industrial Bhd or give up 34.99% of portfolio value over 90 days.

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

PIE Industrial Bhd  vs.  SFP Tech Holdings

PIE Industrial Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days PIE Industrial Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

SFP Tech Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days SFP Tech Holdings 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 quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with PIE Industrial and SFP Tech

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

The idea behind PIE Industrial Bhd and SFP Tech Holdings 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.