Correlation Between Simat Technologies and Professional Waste

Can any of the company-specific risk be diversified away by investing in both Simat Technologies and Professional Waste 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 Simat Technologies and Professional Waste into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Simat Technologies Public and Professional Waste Technology, you can compare the effects of market volatilities on Simat Technologies and Professional Waste 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 Simat Technologies with a short position of Professional Waste. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simat Technologies and Professional Waste.

Diversification Opportunities for Simat Technologies and Professional Waste

0.38

Correlation Coefficient

Simat Technologies  Professional Waste

Weak diversification

The 3 months correlation between Simat and Professional is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Simat Technologies Public and Professional Waste Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Professional Waste and Simat Technologies 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 Simat Technologies Public are associated (or correlated) with Professional Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Professional Waste has no effect on the direction of Simat Technologies i.e., Simat Technologies and Professional Waste go up and down completely randomly.

Pair Corralation between Simat Technologies and Professional Waste

Assuming the 90 days trading horizon Simat Technologies Public is expected to under-perform the Professional Waste. But the stock apears to be less risky and, when comparing its historical volatility, Simat Technologies Public is 30.63 times less risky than Professional Waste. The stock trades about -0.12 of its potential returns per unit of risk. The Professional Waste Technology is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Professional Waste Technology on October 9, 2024 and sell it today you would lose (35.00) from holding Professional Waste Technology or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Simat Technologies Public  vs.  Professional Waste Technology

Simat Technologies Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simat Technologies Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Professional Waste

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Professional Waste Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Professional Waste disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Simat Technologies and Professional Waste

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

The idea behind Simat Technologies Public and Professional Waste Technology 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.