Correlation Between SMA Solar and Scottish American
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Scottish American 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 Scottish American 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 Scottish American Investment, you can compare the effects of market volatilities on SMA Solar and Scottish American 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 Scottish American. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Scottish American.
Diversification Opportunities for SMA Solar and Scottish American
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SMA and Scottish is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Scottish American Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottish American 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 Scottish American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scottish American has no effect on the direction of SMA Solar i.e., SMA Solar and Scottish American go up and down completely randomly.
Pair Corralation between SMA Solar and Scottish American
Assuming the 90 days trading horizon SMA Solar Technology is expected to under-perform the Scottish American. In addition to that, SMA Solar is 5.57 times more volatile than Scottish American Investment. It trades about -0.21 of its total potential returns per unit of risk. Scottish American Investment is currently generating about 0.02 per unit of volatility. If you would invest 50,630 in Scottish American Investment on August 29, 2024 and sell it today you would earn a total of 170.00 from holding Scottish American Investment or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Scottish American Investment
Performance |
| Timeline |
| SMA Solar Technology |
| Scottish American |
SMA Solar and Scottish American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Scottish American
The main advantage of trading using opposite SMA Solar and Scottish American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Scottish American 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 Scottish American will offset losses from the drop in Scottish American's long position.| SMA Solar vs. Lendinvest PLC | SMA Solar vs. Neometals | SMA Solar vs. Coor Service Management | SMA Solar vs. Albion Technology General |
| Scottish American vs. Toyota Motor Corp | Scottish American vs. Lendinvest PLC | Scottish American vs. Neometals | Scottish American 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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