Correlation Between Sitime and Alpha

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

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

Diversification Opportunities for Sitime and Alpha

0.64

Correlation Coefficient

Sitime  Alpha

Poor diversification

The 3 months correlation between Sitime and Alpha is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sitime and Alpha and Omega in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha and Omega and Sitime 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 Sitime are associated (or correlated) with Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha and Omega has no effect on the direction of Sitime i.e., Sitime and Alpha go up and down completely randomly.

Pair Corralation between Sitime and Alpha

Given the investment horizon of 90 days Sitime is expected to generate 1.14 times more return on investment than Alpha. However, Sitime is 1.14 times more volatile than Alpha and Omega. It trades about 0.03 of its potential returns per unit of risk. Alpha and Omega is currently generating about 0.01 per unit of risk. If you would invest  8,387  in Sitime on February 3, 2024 and sell it today you would earn a total of  838.00  from holding Sitime or generate 9.99% return on investment over 90 days.

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

Sitime  vs.  Alpha and Omega

Sitime

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sitime has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Alpha and Omega

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha and Omega has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Sitime and Alpha

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

The idea behind Sitime and Alpha and Omega 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.