Correlation Between Sitronix Technology and Fittech

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

Diversification Opportunities for Sitronix Technology and Fittech

0.3

Correlation Coefficient

Sitronix Technology  Fittech

Weak diversification

The 3 months correlation between Sitronix and Fittech is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sitronix Technology Corp and Fittech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fittech 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 Fittech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fittech has no effect on the direction of Sitronix Technology i.e., Sitronix Technology and Fittech go up and down completely randomly.

Pair Corralation between Sitronix Technology and Fittech

Assuming the 90 days trading horizon Sitronix Technology Corp is expected to under-perform the Fittech. But the stock apears to be less risky and, when comparing its historical volatility, Sitronix Technology Corp is 2.78 times less risky than Fittech. The stock trades about -0.04 of its potential returns per unit of risk. The Fittech Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  13,100  in Fittech Co on September 5, 2024 and sell it today you would earn a total of  2,350  from holding Fittech Co or generate 17.94% return on investment over 90 days.

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

Sitronix Technology Corp  vs.  Fittech 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 latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Fittech

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fittech Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Fittech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sitronix Technology and Fittech

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

The idea behind Sitronix Technology Corp and Fittech 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.