Correlation Between SiS Distribution and Simat Technologies

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

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

Diversification Opportunities for SiS Distribution and Simat Technologies

-0.41

Correlation Coefficient

SiS Distribution  Simat Technologies

Very good diversification

The 3 months correlation between SiS and Simat is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding SiS Distribution Public and Simat Technologies Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simat Technologies Public and SiS Distribution 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 SiS Distribution Public are associated (or correlated) with Simat Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simat Technologies Public has no effect on the direction of SiS Distribution i.e., SiS Distribution and Simat Technologies go up and down completely randomly.

Pair Corralation between SiS Distribution and Simat Technologies

Assuming the 90 days trading horizon SiS Distribution Public is expected to generate 1.0 times more return on investment than Simat Technologies. However, SiS Distribution Public is 1.0 times less risky than Simat Technologies. It trades about 0.04 of its potential returns per unit of risk. Simat Technologies Public is currently generating about 0.04 per unit of risk. If you would invest  2,554  in SiS Distribution Public on October 4, 2024 and sell it today you would earn a total of  296.00  from holding SiS Distribution Public or generate 11.59% return on investment over 90 days.

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

SiS Distribution Public  vs.  Simat Technologies Public

SiS Distribution Public

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SiS Distribution Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, SiS Distribution disclosed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with SiS Distribution and Simat Technologies

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

The idea behind SiS Distribution Public and Simat Technologies Public 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.