Correlation Between Cal Comp and SIM Technology

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

By analyzing existing cross correlation between Cal Comp Electronics Public and SIM Technology Group, you can compare the effects of market volatilities on Cal Comp and SIM 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 Cal Comp with a short position of SIM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Comp and SIM Technology.

Diversification Opportunities for Cal Comp and SIM Technology

-0.14

Correlation Coefficient

Cal Comp  SIM Technology

Good diversification

The 3 months correlation between Cal and SIM is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Cal Comp Electronics Public and SIM Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIM Technology Group and Cal Comp 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 Cal Comp Electronics Public are associated (or correlated) with SIM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIM Technology Group has no effect on the direction of Cal Comp i.e., Cal Comp and SIM Technology go up and down completely randomly.

Pair Corralation between Cal Comp and SIM Technology

Assuming the 90 days trading horizon Cal Comp Electronics Public is expected to generate 1.3 times more return on investment than SIM Technology. However, Cal Comp is 1.3 times more volatile than SIM Technology Group. It trades about 0.07 of its potential returns per unit of risk. SIM Technology Group is currently generating about 0.04 per unit of risk. If you would invest  385.00  in Cal Comp Electronics Public on September 28, 2024 and sell it today you would earn a total of  475.00  from holding Cal Comp Electronics Public or generate 123.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Cal Comp Electronics Public  vs.  SIM Technology Group

Cal Comp Electronics

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cal Comp Electronics Public are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cal Comp showed solid returns over the last few months and may actually be approaching a breakup point.

SIM Technology Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cal Comp and SIM Technology

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

The idea behind Cal Comp Electronics Public and SIM Technology Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.