Correlation Between SigmaTron International and Pro Dex

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

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

Diversification Opportunities for SigmaTron International and Pro Dex

-0.35

Correlation Coefficient

SigmaTron International  Pro Dex

Very good diversification

The 3 months correlation between SigmaTron and Pro is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding SigmaTron International and Pro Dex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Dex and SigmaTron International 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 SigmaTron International are associated (or correlated) with Pro Dex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Dex has no effect on the direction of SigmaTron International i.e., SigmaTron International and Pro Dex go up and down completely randomly.

Pair Corralation between SigmaTron International and Pro Dex

Given the investment horizon of 90 days SigmaTron International is expected to under-perform the Pro Dex. But the stock apears to be less risky and, when comparing its historical volatility, SigmaTron International is 1.94 times less risky than Pro Dex. The stock trades about -0.06 of its potential returns per unit of risk. The Pro Dex is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,839  in Pro Dex on September 15, 2024 and sell it today you would earn a total of  2,105  from holding Pro Dex or generate 74.15% return on investment over 90 days.

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

SigmaTron International  vs.  Pro Dex

SigmaTron International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SigmaTron International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pro Dex

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Dex are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Pro Dex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SigmaTron International and Pro Dex

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

The idea behind SigmaTron International and Pro Dex 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.