Correlation Between SMA Solar and Mobile Tornado
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Mobile Tornado 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 Mobile Tornado 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 Mobile Tornado Group, you can compare the effects of market volatilities on SMA Solar and Mobile Tornado 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 Mobile Tornado. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Mobile Tornado.
Diversification Opportunities for SMA Solar and Mobile Tornado
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SMA and Mobile is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Mobile Tornado Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobile Tornado Group 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 Mobile Tornado. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobile Tornado Group has no effect on the direction of SMA Solar i.e., SMA Solar and Mobile Tornado go up and down completely randomly.
Pair Corralation between SMA Solar and Mobile Tornado
Assuming the 90 days trading horizon SMA Solar is expected to generate 9.72 times less return on investment than Mobile Tornado. But when comparing it to its historical volatility, SMA Solar Technology is 1.05 times less risky than Mobile Tornado. It trades about 0.01 of its potential returns per unit of risk. Mobile Tornado Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 140.00 in Mobile Tornado Group on October 24, 2024 and sell it today you would earn a total of 30.00 from holding Mobile Tornado Group or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Mobile Tornado Group
Performance |
| Timeline |
| SMA Solar Technology |
| Mobile Tornado Group |
SMA Solar and Mobile Tornado Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Mobile Tornado
The main advantage of trading using opposite SMA Solar and Mobile Tornado positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Mobile Tornado 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 Mobile Tornado will offset losses from the drop in Mobile Tornado's long position.| SMA Solar vs. Mobile Tornado Group | SMA Solar vs. Batm Advanced Communications | SMA Solar vs. Zegona Communications Plc | SMA Solar vs. Charter Communications Cl |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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