Correlation Between Deswell Industries and Maris Tech

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

By analyzing existing cross correlation between Deswell Industries and Maris Tech, you can compare the effects of market volatilities on Deswell Industries and Maris Tech 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 Deswell Industries with a short position of Maris Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deswell Industries and Maris Tech.

Diversification Opportunities for Deswell Industries and Maris Tech

-0.29

Correlation Coefficient

Deswell Industries  Maris Tech

Very good diversification

The 3 months correlation between Deswell and Maris is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Deswell Industries and Maris Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maris Tech and Deswell Industries 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 Deswell Industries are associated (or correlated) with Maris Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maris Tech has no effect on the direction of Deswell Industries i.e., Deswell Industries and Maris Tech go up and down completely randomly.

Pair Corralation between Deswell Industries and Maris Tech

Given the investment horizon of 90 days Deswell Industries is expected to under-perform the Maris Tech. But the stock apears to be less risky and, when comparing its historical volatility, Deswell Industries is 6.36 times less risky than Maris Tech. The stock trades about -0.11 of its potential returns per unit of risk. The Maris Tech is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  223.00  in Maris Tech on December 1, 2024 and sell it today you would earn a total of  0.00  from holding Maris Tech or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Deswell Industries  vs.  Maris Tech

Deswell Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deswell Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Maris Tech

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Maris Tech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Maris Tech disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deswell Industries and Maris Tech

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

The idea behind Deswell Industries and Maris Tech 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.