Correlation Between SigmaTron International and Video Display

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

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

Diversification Opportunities for SigmaTron International and Video Display

-0.48

Correlation Coefficient

SigmaTron International  Video Display

Very good diversification

The 3 months correlation between SigmaTron and Video is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding SigmaTron International and Video Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Video Display 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 Video Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Video Display has no effect on the direction of SigmaTron International i.e., SigmaTron International and Video Display go up and down completely randomly.

Pair Corralation between SigmaTron International and Video Display

If you would invest  115.00  in Video Display on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Video Display or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

SigmaTron International  vs.  Video Display

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 unsteady performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Video Display

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Video Display has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Video Display is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SigmaTron International and Video Display

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

The idea behind SigmaTron International and Video Display 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.