Correlation Between Sitronix Technology and ALFORMER Industrial

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

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

Diversification Opportunities for Sitronix Technology and ALFORMER Industrial

-0.36

Correlation Coefficient

Sitronix Technology  ALFORMER Industrial

Very good diversification

The 3 months correlation between Sitronix and ALFORMER is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sitronix Technology Corp and ALFORMER Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALFORMER Industrial and Sitronix 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 Sitronix Technology Corp are associated (or correlated) with ALFORMER Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALFORMER Industrial has no effect on the direction of Sitronix Technology i.e., Sitronix Technology and ALFORMER Industrial go up and down completely randomly.

Pair Corralation between Sitronix Technology and ALFORMER Industrial

Assuming the 90 days trading horizon Sitronix Technology Corp is expected to generate 0.63 times more return on investment than ALFORMER Industrial. However, Sitronix Technology Corp is 1.59 times less risky than ALFORMER Industrial. It trades about 0.2 of its potential returns per unit of risk. ALFORMER Industrial Co is currently generating about -0.26 per unit of risk. If you would invest  21,000  in Sitronix Technology Corp on October 10, 2024 and sell it today you would earn a total of  1,400  from holding Sitronix Technology Corp or generate 6.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Sitronix Technology Corp  vs.  ALFORMER Industrial Co

Sitronix Technology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

ALFORMER Industrial

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Sitronix Technology and ALFORMER Industrial

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

The idea behind Sitronix Technology Corp and ALFORMER 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.