Correlation Between Research Frontiers and SigmaTron International

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

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

Diversification Opportunities for Research Frontiers and SigmaTron International

0.88

Correlation Coefficient

Research Frontiers  SigmaTron International

Very poor diversification

The 3 months correlation between Research and SigmaTron is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Research Frontiers Incorporate and SigmaTron International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SigmaTron International and Research Frontiers 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 Research Frontiers Incorporated 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 Research Frontiers i.e., Research Frontiers and SigmaTron International go up and down completely randomly.

Pair Corralation between Research Frontiers and SigmaTron International

Given the investment horizon of 90 days Research Frontiers Incorporated is expected to under-perform the SigmaTron International. But the stock apears to be less risky and, when comparing its historical volatility, Research Frontiers Incorporated is 1.26 times less risky than SigmaTron International. The stock trades about -0.2 of its potential returns per unit of risk. The SigmaTron International is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  173.00  in SigmaTron International on December 30, 2024 and sell it today you would lose (50.00) from holding SigmaTron International or give up 28.9% of portfolio value over 90 days.

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

Research Frontiers Incorporate  vs.  SigmaTron International

Research Frontiers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Research Frontiers Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail 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 Research Frontiers and SigmaTron International

The main advantage of trading using opposite Research Frontiers and SigmaTron International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Research Frontiers 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 Research Frontiers Incorporated 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.