Correlation Between SMA Solar and Gaztransport
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Gaztransport 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 Gaztransport 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 Gaztransport et Technigaz, you can compare the effects of market volatilities on SMA Solar and Gaztransport 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 Gaztransport. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Gaztransport.
Diversification Opportunities for SMA Solar and Gaztransport
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between SMA and Gaztransport is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Gaztransport et Technigaz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport et Technigaz 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 Gaztransport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport et Technigaz has no effect on the direction of SMA Solar i.e., SMA Solar and Gaztransport go up and down completely randomly.
Pair Corralation between SMA Solar and Gaztransport
Assuming the 90 days trading horizon SMA Solar Technology is expected to generate 2.26 times more return on investment than Gaztransport. However, SMA Solar is 2.26 times more volatile than Gaztransport et Technigaz. It trades about 0.23 of its potential returns per unit of risk. Gaztransport et Technigaz is currently generating about 0.39 per unit of risk. If you would invest 1,348 in SMA Solar Technology on October 20, 2024 and sell it today you would earn a total of 208.00 from holding SMA Solar Technology or generate 15.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Gaztransport et Technigaz
Performance |
| Timeline |
| SMA Solar Technology |
| Gaztransport et Technigaz |
SMA Solar and Gaztransport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Gaztransport
The main advantage of trading using opposite SMA Solar and Gaztransport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Gaztransport 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 Gaztransport will offset losses from the drop in Gaztransport's long position.| SMA Solar vs. Atalaya Mining | SMA Solar vs. Lundin Mining Corp | SMA Solar vs. Beowulf Mining | SMA Solar vs. First Class Metals |
| Gaztransport vs. One Media iP | Gaztransport vs. Xeros Technology Group | Gaztransport vs. SMA Solar Technology | Gaztransport vs. Sunny Optical Technology |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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