Correlation Between Pro Dex and SigmaTron International

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

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

Diversification Opportunities for Pro Dex and SigmaTron International

0.69

Correlation Coefficient

Pro Dex  SigmaTron International

Poor diversification

The 3 months correlation between Pro and SigmaTron is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Pro Dex and SigmaTron International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SigmaTron International and Pro Dex 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 Pro Dex 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 Pro Dex i.e., Pro Dex and SigmaTron International go up and down completely randomly.

Pair Corralation between Pro Dex and SigmaTron International

Given the investment horizon of 90 days Pro Dex is expected to generate 1.48 times more return on investment than SigmaTron International. However, Pro Dex is 1.48 times more volatile than SigmaTron International. It trades about -0.02 of its potential returns per unit of risk. SigmaTron International is currently generating about -0.37 per unit of risk. If you would invest  3,530  in Pro Dex on December 4, 2024 and sell it today you would lose (98.00) from holding Pro Dex or give up 2.78% of portfolio value over 90 days.

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

Pro Dex  vs.  SigmaTron International

Pro Dex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pro Dex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly 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.

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 Pro Dex and SigmaTron International

The main advantage of trading using opposite Pro Dex and SigmaTron International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pro Dex 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 Pro Dex 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.