Correlation Between Astar and SMC Investment
Can any of the company-specific risk be diversified away by investing in both Astar and SMC Investment 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 Astar and SMC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and SMC Investment Trading, you can compare the effects of market volatilities on Astar and SMC Investment 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 Astar with a short position of SMC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and SMC Investment.
Diversification Opportunities for Astar and SMC Investment
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Astar and SMC is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Astar and SMC Investment Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMC Investment Trading and Astar 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 Astar are associated (or correlated) with SMC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMC Investment Trading has no effect on the direction of Astar i.e., Astar and SMC Investment go up and down completely randomly.
Pair Corralation between Astar and SMC Investment
Assuming the 90 days trading horizon Astar is expected to under-perform the SMC Investment. In addition to that, Astar is 1.49 times more volatile than SMC Investment Trading. It trades about -0.02 of its total potential returns per unit of risk. SMC Investment Trading is currently generating about -0.03 per unit of volatility. If you would invest 1,035,000 in SMC Investment Trading on October 12, 2024 and sell it today you would lose (269,000) from holding SMC Investment Trading or give up 25.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.3% |
| Values | Daily Returns |
Astar vs. SMC Investment Trading
Performance |
| Timeline |
| Astar |
| SMC Investment Trading |
Astar and SMC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and SMC Investment
The main advantage of trading using opposite Astar and SMC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, SMC Investment 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 SMC Investment will offset losses from the drop in SMC Investment's long position.The idea behind Astar and SMC Investment Trading pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| SMC Investment vs. Elcom Technology Communications | SMC Investment vs. Petrolimex Petrochemical JSC | SMC Investment vs. Pha Le Plastics | SMC Investment vs. Sao Vang Rubber |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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