Correlation Between SMA Solar and AcadeMedia
Can any of the company-specific risk be diversified away by investing in both SMA Solar and AcadeMedia 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 AcadeMedia 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 AcadeMedia AB, you can compare the effects of market volatilities on SMA Solar and AcadeMedia 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 AcadeMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and AcadeMedia.
Diversification Opportunities for SMA Solar and AcadeMedia
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SMA and AcadeMedia is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and AcadeMedia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AcadeMedia AB 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 AcadeMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AcadeMedia AB has no effect on the direction of SMA Solar i.e., SMA Solar and AcadeMedia go up and down completely randomly.
Pair Corralation between SMA Solar and AcadeMedia
Assuming the 90 days trading horizon SMA Solar Technology is expected to under-perform the AcadeMedia. In addition to that, SMA Solar is 2.22 times more volatile than AcadeMedia AB. It trades about -0.11 of its total potential returns per unit of risk. AcadeMedia AB is currently generating about 0.12 per unit of volatility. If you would invest 5,207 in AcadeMedia AB on October 17, 2024 and sell it today you would earn a total of 1,373 from holding AcadeMedia AB or generate 26.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. AcadeMedia AB
Performance |
| Timeline |
| SMA Solar Technology |
| AcadeMedia AB |
SMA Solar and AcadeMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and AcadeMedia
The main advantage of trading using opposite SMA Solar and AcadeMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, AcadeMedia 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 AcadeMedia will offset losses from the drop in AcadeMedia's long position.| SMA Solar vs. Inspiration Healthcare Group | SMA Solar vs. Wheaton Precious Metals | SMA Solar vs. HCA Healthcare | SMA Solar vs. Travel Leisure Co |
| AcadeMedia vs. Aptitude Software Group | AcadeMedia vs. Primorus Investments plc | AcadeMedia vs. SMA Solar Technology | AcadeMedia vs. Allianz Technology Trust |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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