Correlation Between NYSE Composite and SavMobi Technology

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

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

Diversification Opportunities for NYSE Composite and SavMobi Technology

-0.06

Correlation Coefficient

NYSE Composite  SavMobi Technology

Good diversification

The 3 months correlation between NYSE and SavMobi is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and SavMobi Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SavMobi Technology and NYSE Composite 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 NYSE Composite are associated (or correlated) with SavMobi Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SavMobi Technology has no effect on the direction of NYSE Composite i.e., NYSE Composite and SavMobi Technology go up and down completely randomly.

Pair Corralation between NYSE Composite and SavMobi Technology

Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.06 times more return on investment than SavMobi Technology. However, NYSE Composite is 17.97 times less risky than SavMobi Technology. It trades about 0.08 of its potential returns per unit of risk. SavMobi Technology is currently generating about -0.04 per unit of risk. If you would invest  1,574,887  in NYSE Composite on September 30, 2024 and sell it today you would earn a total of  348,961  from holding NYSE Composite or generate 22.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.73%
Values	Daily Returns

NYSE Composite  vs.  SavMobi Technology

Pair Trading with NYSE Composite and SavMobi Technology

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

The idea behind NYSE Composite and SavMobi Technology 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 Stocks Directory module to find actively traded stocks across global markets.