Correlation Between Alpha En and SigmaTron International

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

By analyzing existing cross correlation between alpha En and SigmaTron International, you can compare the effects of market volatilities on Alpha En and SigmaTron International 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 Alpha En with a short position of SigmaTron International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha En and SigmaTron International.

Diversification Opportunities for Alpha En and SigmaTron International

-0.78

Correlation Coefficient

Alpha En  SigmaTron International

Pay attention - limited upside

The 3 months correlation between Alpha and SigmaTron is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding alpha En and SigmaTron International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SigmaTron International and Alpha En 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 alpha En are associated (or correlated) with SigmaTron International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SigmaTron International has no effect on the direction of Alpha En i.e., Alpha En and SigmaTron International go up and down completely randomly.

Pair Corralation between Alpha En and SigmaTron International

Given the investment horizon of 90 days alpha En is expected to generate 3.33 times more return on investment than SigmaTron International. However, Alpha En is 3.33 times more volatile than SigmaTron International. It trades about 0.13 of its potential returns per unit of risk. SigmaTron International is currently generating about -0.08 per unit of risk. If you would invest  0.01  in alpha En on December 26, 2024 and sell it today you would earn a total of  0.01  from holding alpha En or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

alpha En  vs.  SigmaTron International

alpha En

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in alpha En are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Alpha En exhibited solid returns over the last few months and may actually be approaching a breakup point.

SigmaTron International

Risk-Adjusted Performance

Very Weak

Over the last 90 days SigmaTron International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Alpha En and SigmaTron International

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

The idea behind alpha En and SigmaTron International 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.