Correlation Between SIM Technology and Arcadyan Technology

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

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

Diversification Opportunities for SIM Technology and Arcadyan Technology

-0.04

Correlation Coefficient

SIM Technology  Arcadyan Technology

Good diversification

The 3 months correlation between SIM and Arcadyan is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding SIM Technology Group and Arcadyan Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcadyan Technology Corp and SIM 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 SIM Technology Group are associated (or correlated) with Arcadyan Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcadyan Technology Corp has no effect on the direction of SIM Technology i.e., SIM Technology and Arcadyan Technology go up and down completely randomly.

Pair Corralation between SIM Technology and Arcadyan Technology

Assuming the 90 days trading horizon SIM Technology is expected to generate 1.7 times less return on investment than Arcadyan Technology. In addition to that, SIM Technology is 1.19 times more volatile than Arcadyan Technology Corp. It trades about 0.04 of its total potential returns per unit of risk. Arcadyan Technology Corp is currently generating about 0.07 per unit of volatility. If you would invest  9,610  in Arcadyan Technology Corp on September 25, 2024 and sell it today you would earn a total of  8,090  from holding Arcadyan Technology Corp or generate 84.18% return on investment over 90 days.

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

SIM Technology Group  vs.  Arcadyan Technology Corp

SIM Technology Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SIM Technology Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Arcadyan Technology Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arcadyan Technology Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Arcadyan Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SIM Technology and Arcadyan Technology

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

The idea behind SIM Technology Group and Arcadyan Technology Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .