Correlation Between SMA Solar and Sydbank
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Sydbank 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 SMA Solar and Sydbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and Sydbank, you can compare the effects of market volatilities on SMA Solar and Sydbank 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 SMA Solar with a short position of Sydbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Sydbank.
Diversification Opportunities for SMA Solar and Sydbank
Very good diversification
The 3 months correlation between SMA and Sydbank is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Sydbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank and SMA Solar 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 SMA Solar Technology are associated (or correlated) with Sydbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank has no effect on the direction of SMA Solar i.e., SMA Solar and Sydbank go up and down completely randomly.
Pair Corralation between SMA Solar and Sydbank
Assuming the 90 days trading horizon SMA Solar Technology is expected to generate 1.68 times more return on investment than Sydbank. However, SMA Solar is 1.68 times more volatile than Sydbank. It trades about 0.02 of its potential returns per unit of risk. Sydbank is currently generating about -0.01 per unit of risk. If you would invest 1,490 in SMA Solar Technology on October 11, 2024 and sell it today you would earn a total of 5.00 from holding SMA Solar Technology or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Sydbank
Performance |
| Timeline |
| SMA Solar Technology |
| Sydbank |
SMA Solar and Sydbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Sydbank
The main advantage of trading using opposite SMA Solar and Sydbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Sydbank 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 Sydbank will offset losses from the drop in Sydbank's long position.| SMA Solar vs. Synthomer plc | SMA Solar vs. Flow Traders NV | SMA Solar vs. Cellnex Telecom SA | SMA Solar vs. Morgan Advanced Materials |
| Sydbank vs. Bankers Investment Trust | Sydbank vs. SMA Solar Technology | Sydbank vs. Seraphim Space Investment | Sydbank vs. Primorus Investments plc |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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