Correlation Between Squirrel Media and Tier1 Technology

Can any of the company-specific risk be diversified away by investing in both Squirrel Media and Tier1 Technology 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 Squirrel Media and Tier1 Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Squirrel Media SA and Tier1 Technology SA, you can compare the effects of market volatilities on Squirrel Media and Tier1 Technology 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 Squirrel Media with a short position of Tier1 Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Squirrel Media and Tier1 Technology.

Diversification Opportunities for Squirrel Media and Tier1 Technology

0.27

Correlation Coefficient

Squirrel Media  Tier1 Technology

Modest diversification

The 3 months correlation between Squirrel and Tier1 is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Squirrel Media SA and Tier1 Technology SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tier1 Technology and Squirrel Media 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 Squirrel Media SA are associated (or correlated) with Tier1 Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tier1 Technology has no effect on the direction of Squirrel Media i.e., Squirrel Media and Tier1 Technology go up and down completely randomly.

Pair Corralation between Squirrel Media and Tier1 Technology

If you would invest  145.00  in Squirrel Media SA on December 4, 2024 and sell it today you would earn a total of  73.00  from holding Squirrel Media SA or generate 50.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	47.62%
Values	Daily Returns

Squirrel Media SA  vs.  Tier1 Technology SA

Squirrel Media SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Squirrel Media SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Squirrel Media exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tier1 Technology

Risk-Adjusted Performance

OK

Over the last 90 days Tier1 Technology SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Tier1 Technology is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Squirrel Media and Tier1 Technology

The main advantage of trading using opposite Squirrel Media and Tier1 Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Squirrel Media position performs unexpectedly, Tier1 Technology 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 Tier1 Technology will offset losses from the drop in Tier1 Technology's long position.

The idea behind Squirrel Media SA and Tier1 Technology SA 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 Commodity Directory module to find actively traded commodities issued by global exchanges.