Correlation Between SMA Solar and Dunedin Enterprise
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Dunedin Enterprise 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 Dunedin Enterprise 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 Dunedin Enterprise Investment, you can compare the effects of market volatilities on SMA Solar and Dunedin Enterprise 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 Dunedin Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Dunedin Enterprise.
Diversification Opportunities for SMA Solar and Dunedin Enterprise
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SMA and Dunedin is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Dunedin Enterprise Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunedin Enterprise 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 Dunedin Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunedin Enterprise has no effect on the direction of SMA Solar i.e., SMA Solar and Dunedin Enterprise go up and down completely randomly.
Pair Corralation between SMA Solar and Dunedin Enterprise
Assuming the 90 days trading horizon SMA Solar Technology is expected to under-perform the Dunedin Enterprise. In addition to that, SMA Solar is 4.75 times more volatile than Dunedin Enterprise Investment. It trades about -0.21 of its total potential returns per unit of risk. Dunedin Enterprise Investment is currently generating about 0.11 per unit of volatility. If you would invest 49,650 in Dunedin Enterprise Investment on August 29, 2024 and sell it today you would earn a total of 1,250 from holding Dunedin Enterprise Investment or generate 2.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Dunedin Enterprise Investment
Performance |
| Timeline |
| SMA Solar Technology |
| Dunedin Enterprise |
SMA Solar and Dunedin Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Dunedin Enterprise
The main advantage of trading using opposite SMA Solar and Dunedin Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Dunedin Enterprise 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 Dunedin Enterprise will offset losses from the drop in Dunedin Enterprise's long position.| SMA Solar vs. Lendinvest PLC | SMA Solar vs. Neometals | SMA Solar vs. Coor Service Management | SMA Solar vs. Albion Technology General |
| Dunedin Enterprise vs. Toyota Motor Corp | Dunedin Enterprise vs. Lendinvest PLC | Dunedin Enterprise vs. Neometals | Dunedin Enterprise vs. Coor Service Management |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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