Correlation Between SMA Solar and Atalaya Mining
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Atalaya Mining 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 Atalaya Mining 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 Atalaya Mining, you can compare the effects of market volatilities on SMA Solar and Atalaya Mining 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 Atalaya Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Atalaya Mining.
Diversification Opportunities for SMA Solar and Atalaya Mining
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SMA and Atalaya is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Atalaya Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atalaya Mining 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 Atalaya Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atalaya Mining has no effect on the direction of SMA Solar i.e., SMA Solar and Atalaya Mining go up and down completely randomly.
Pair Corralation between SMA Solar and Atalaya Mining
Assuming the 90 days trading horizon SMA Solar Technology is expected to under-perform the Atalaya Mining. In addition to that, SMA Solar is 1.58 times more volatile than Atalaya Mining. It trades about -0.07 of its total potential returns per unit of risk. Atalaya Mining is currently generating about 0.01 per unit of volatility. If you would invest 36,082 in Atalaya Mining on October 27, 2024 and sell it today you would lose (1,082) from holding Atalaya Mining or give up 3.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Atalaya Mining
Performance |
| Timeline |
| SMA Solar Technology |
| Atalaya Mining |
SMA Solar and Atalaya Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Atalaya Mining
The main advantage of trading using opposite SMA Solar and Atalaya Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Atalaya Mining 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 Atalaya Mining will offset losses from the drop in Atalaya Mining's long position.| SMA Solar vs. Axfood AB | SMA Solar vs. Grieg Seafood | SMA Solar vs. Dairy Farm International | SMA Solar vs. Futura Medical |
| Atalaya Mining vs. Morgan Advanced Materials | Atalaya Mining vs. Westlake Chemical Corp | Atalaya Mining vs. Ashtead Technology Holdings | Atalaya Mining 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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