Correlation Between SMA Solar and Golden Metal
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Golden Metal 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 Golden Metal 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 Golden Metal Resources, you can compare the effects of market volatilities on SMA Solar and Golden Metal 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 Golden Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Golden Metal.
Diversification Opportunities for SMA Solar and Golden Metal
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SMA and Golden is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Golden Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Metal Resources 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 Golden Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Metal Resources has no effect on the direction of SMA Solar i.e., SMA Solar and Golden Metal go up and down completely randomly.
Pair Corralation between SMA Solar and Golden Metal
Assuming the 90 days trading horizon SMA Solar Technology is expected to under-perform the Golden Metal. But the stock apears to be less risky and, when comparing its historical volatility, SMA Solar Technology is 13.85 times less risky than Golden Metal. The stock trades about -0.07 of its potential returns per unit of risk. The Golden Metal Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9.00 in Golden Metal Resources on September 3, 2024 and sell it today you would earn a total of 3,041 from holding Golden Metal Resources or generate 33788.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 80.52% |
| Values | Daily Returns |
SMA Solar Technology vs. Golden Metal Resources
Performance |
| Timeline |
| SMA Solar Technology |
| Golden Metal Resources |
SMA Solar and Golden Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Golden Metal
The main advantage of trading using opposite SMA Solar and Golden Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Golden Metal 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 Golden Metal will offset losses from the drop in Golden Metal's long position.| SMA Solar vs. Catalyst Media Group | SMA Solar vs. CATLIN GROUP | SMA Solar vs. Tamburi Investment Partners | SMA Solar vs. Magnora ASA |
| Golden Metal vs. Celebrus Technologies plc | Golden Metal vs. SMA Solar Technology | Golden Metal vs. AIM ImmunoTech | Golden Metal vs. L3Harris Technologies |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |