Correlation Between SMA Solar and Ondine Biomedical
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Ondine Biomedical 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 Ondine Biomedical 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 Ondine Biomedical, you can compare the effects of market volatilities on SMA Solar and Ondine Biomedical 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 Ondine Biomedical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Ondine Biomedical.
Diversification Opportunities for SMA Solar and Ondine Biomedical
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SMA and Ondine is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Ondine Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ondine Biomedical 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 Ondine Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ondine Biomedical has no effect on the direction of SMA Solar i.e., SMA Solar and Ondine Biomedical go up and down completely randomly.
Pair Corralation between SMA Solar and Ondine Biomedical
Assuming the 90 days trading horizon SMA Solar Technology is expected to generate 2.13 times more return on investment than Ondine Biomedical. However, SMA Solar is 2.13 times more volatile than Ondine Biomedical. It trades about 0.18 of its potential returns per unit of risk. Ondine Biomedical is currently generating about 0.01 per unit of risk. If you would invest 1,249 in SMA Solar Technology on September 20, 2024 and sell it today you would earn a total of 183.00 from holding SMA Solar Technology or generate 14.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Ondine Biomedical
Performance |
| Timeline |
| SMA Solar Technology |
| Ondine Biomedical |
SMA Solar and Ondine Biomedical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Ondine Biomedical
The main advantage of trading using opposite SMA Solar and Ondine Biomedical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Ondine Biomedical 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 Ondine Biomedical will offset losses from the drop in Ondine Biomedical's long position.| SMA Solar vs. Porvair plc | SMA Solar vs. GreenX Metals | SMA Solar vs. Alaska Air Group | SMA Solar vs. Silvercorp Metals |
| Ondine Biomedical vs. Ebro Foods | Ondine Biomedical vs. Sunny Optical Technology | Ondine Biomedical vs. International Biotechnology Trust | Ondine Biomedical vs. SMA Solar 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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