Correlation Between SigmaTron International and Electro Sensors

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Can any of the company-specific risk be diversified away by investing in both SigmaTron International and Electro Sensors 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 SigmaTron International and Electro Sensors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SigmaTron International and Electro Sensors, you can compare the effects of market volatilities on SigmaTron International and Electro Sensors 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 SigmaTron International with a short position of Electro Sensors. Check out your portfolio center. Please also check ongoing floating volatility patterns of SigmaTron International and Electro Sensors.

Diversification Opportunities for SigmaTron International and Electro Sensors

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between SigmaTron and Electro is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SigmaTron International and Electro Sensors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electro Sensors and SigmaTron International 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 SigmaTron International are associated (or correlated) with Electro Sensors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electro Sensors has no effect on the direction of SigmaTron International i.e., SigmaTron International and Electro Sensors go up and down completely randomly.

Pair Corralation between SigmaTron International and Electro Sensors

Given the investment horizon of 90 days SigmaTron International is expected to generate 3.96 times more return on investment than Electro Sensors. However, SigmaTron International is 3.96 times more volatile than Electro Sensors. It trades about 0.13 of its potential returns per unit of risk. Electro Sensors is currently generating about 0.05 per unit of risk. If you would invest  139.00  in SigmaTron International on May 7, 2025 and sell it today you would earn a total of  162.00  from holding SigmaTron International or generate 116.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy91.8%
ValuesDaily Returns

SigmaTron International  vs.  Electro Sensors

 Performance 
       Timeline  
SigmaTron International 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Over the last 90 days SigmaTron International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat uncertain primary indicators, SigmaTron International sustained solid returns over the last few months and may actually be approaching a breakup point.
Electro Sensors 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Electro Sensors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Electro Sensors exhibited solid returns over the last few months and may actually be approaching a breakup point.

SigmaTron International and Electro Sensors Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SigmaTron International and Electro Sensors

The main advantage of trading using opposite SigmaTron International and Electro Sensors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SigmaTron International position performs unexpectedly, Electro Sensors 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 Electro Sensors will offset losses from the drop in Electro Sensors' long position.
The idea behind SigmaTron International and Electro Sensors 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.
Check out your portfolio center.
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 CEOs Directory module to screen CEOs from public companies around the world.

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