Correlation Between SGF Capital and Simat Technologies

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

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

Diversification Opportunities for SGF Capital and Simat Technologies

0.34

Correlation Coefficient

SGF Capital  Simat Technologies

Weak diversification

The 3 months correlation between SGF and Simat is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding SGF Capital 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 SGF Capital 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 SGF Capital 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 SGF Capital i.e., SGF Capital and Simat Technologies go up and down completely randomly.

Pair Corralation between SGF Capital and Simat Technologies

Assuming the 90 days trading horizon SGF Capital Public is expected to generate 2.02 times more return on investment than Simat Technologies. However, SGF Capital is 2.02 times more volatile than Simat Technologies Public. It trades about 0.08 of its potential returns per unit of risk. Simat Technologies Public is currently generating about -0.06 per unit of risk. If you would invest  16.00  in SGF Capital Public on April 24, 2025 and sell it today you would earn a total of  3.00  from holding SGF Capital Public or generate 18.75% return on investment over 90 days.

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

SGF Capital Public  vs.  Simat Technologies Public

SGF Capital Public

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SGF Capital Public are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, SGF Capital disclosed solid returns over the last few months and may actually be approaching a breakup point.

Simat Technologies Public

Risk-Adjusted Performance

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 latest conflicting performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with SGF Capital and Simat Technologies

The main advantage of trading using opposite SGF Capital and Simat Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SGF Capital 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 SGF Capital 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.