Correlation Between SMA Solar and Zegona Communications
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Zegona Communications 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 Zegona Communications 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 Zegona Communications Plc, you can compare the effects of market volatilities on SMA Solar and Zegona Communications 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 Zegona Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Zegona Communications.
Diversification Opportunities for SMA Solar and Zegona Communications
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SMA and Zegona is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Zegona Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zegona Communications Plc 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 Zegona Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zegona Communications Plc has no effect on the direction of SMA Solar i.e., SMA Solar and Zegona Communications go up and down completely randomly.
Pair Corralation between SMA Solar and Zegona Communications
Assuming the 90 days trading horizon SMA Solar Technology is expected to under-perform the Zegona Communications. In addition to that, SMA Solar is 1.09 times more volatile than Zegona Communications Plc. It trades about -0.12 of its total potential returns per unit of risk. Zegona Communications Plc is currently generating about 0.18 per unit of volatility. If you would invest 42,400 in Zegona Communications Plc on November 3, 2024 and sell it today you would earn a total of 4,600 from holding Zegona Communications Plc or generate 10.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Zegona Communications Plc
Performance |
| Timeline |
| SMA Solar Technology |
| Zegona Communications Plc |
SMA Solar and Zegona Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Zegona Communications
The main advantage of trading using opposite SMA Solar and Zegona Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Zegona Communications 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 Zegona Communications will offset losses from the drop in Zegona Communications' long position.| SMA Solar vs. Allianz Technology Trust | SMA Solar vs. Xeros Technology Group | SMA Solar vs. TechnipFMC PLC | SMA Solar vs. Vitec Software Group |
| Zegona Communications vs. Eastman Chemical Co | Zegona Communications vs. CAP LEASE AVIATION | Zegona Communications vs. First Majestic Silver | Zegona Communications vs. STMicroelectronics NV |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |