Correlation Between SMA Solar and Sabien Technology
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Sabien Technology 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 Sabien Technology 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 Sabien Technology Group, you can compare the effects of market volatilities on SMA Solar and Sabien Technology 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 Sabien Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Sabien Technology.
Diversification Opportunities for SMA Solar and Sabien Technology
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SMA and Sabien is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Sabien Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabien Technology 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 Sabien Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabien Technology has no effect on the direction of SMA Solar i.e., SMA Solar and Sabien Technology go up and down completely randomly.
Pair Corralation between SMA Solar and Sabien Technology
Assuming the 90 days trading horizon SMA Solar Technology is expected to generate 5.57 times more return on investment than Sabien Technology. However, SMA Solar is 5.57 times more volatile than Sabien Technology Group. It trades about 0.26 of its potential returns per unit of risk. Sabien Technology Group is currently generating about -0.29 per unit of risk. If you would invest 1,429 in SMA Solar Technology on December 8, 2024 and sell it today you would earn a total of 588.00 from holding SMA Solar Technology or generate 41.15% 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. Sabien Technology Group
Performance |
| Timeline |
| SMA Solar Technology |
| Sabien Technology |
SMA Solar and Sabien Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Sabien Technology
The main advantage of trading using opposite SMA Solar and Sabien Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Sabien Technology 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 Sabien Technology will offset losses from the drop in Sabien Technology's long position.| SMA Solar vs. Wheaton Precious Metals | SMA Solar vs. Endeavour Mining Corp | SMA Solar vs. Martin Marietta Materials | SMA Solar vs. GreenX Metals |
| Sabien Technology vs. Metals Exploration Plc | Sabien Technology vs. Golden Metal Resources | Sabien Technology vs. Bell Food Group | Sabien Technology vs. Endeavour Mining Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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