Correlation Between SecureTech Innovations and Superior Industries

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

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

Diversification Opportunities for SecureTech Innovations and Superior Industries

0.12

Correlation Coefficient

SecureTech Innovations  Superior Industries

Average diversification

The 3 months correlation between SecureTech and Superior is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding SecureTech Innovations and Superior Industries Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Industries and SecureTech Innovations 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 SecureTech Innovations are associated (or correlated) with Superior Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Industries has no effect on the direction of SecureTech Innovations i.e., SecureTech Innovations and Superior Industries go up and down completely randomly.

Pair Corralation between SecureTech Innovations and Superior Industries

Given the investment horizon of 90 days SecureTech Innovations is expected to generate 9.15 times more return on investment than Superior Industries. However, SecureTech Innovations is 9.15 times more volatile than Superior Industries International. It trades about 0.12 of its potential returns per unit of risk. Superior Industries International is currently generating about -0.16 per unit of risk. If you would invest  100.00  in SecureTech Innovations on October 24, 2024 and sell it today you would earn a total of  50.00  from holding SecureTech Innovations or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

SecureTech Innovations  vs.  Superior Industries Internatio

SecureTech Innovations

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SecureTech Innovations are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, SecureTech Innovations demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Superior Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SecureTech Innovations and Superior Industries

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

The idea behind SecureTech Innovations and Superior Industries 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.

Check out your portfolio center.

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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.