Correlation Between Central Asia and Smithson Investment
Can any of the company-specific risk be diversified away by investing in both Central Asia and Smithson 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 Central Asia and Smithson Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Asia Metals and Smithson Investment Trust, you can compare the effects of market volatilities on Central Asia and Smithson 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 Central Asia with a short position of Smithson Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Asia and Smithson Investment.
Diversification Opportunities for Central Asia and Smithson Investment
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Central and Smithson is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and Smithson Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smithson Investment Trust and Central Asia 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 Central Asia Metals are associated (or correlated) with Smithson Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smithson Investment Trust has no effect on the direction of Central Asia i.e., Central Asia and Smithson Investment go up and down completely randomly.
Pair Corralation between Central Asia and Smithson Investment
Assuming the 90 days trading horizon Central Asia Metals is expected to under-perform the Smithson Investment. In addition to that, Central Asia is 1.44 times more volatile than Smithson Investment Trust. It trades about -0.01 of its total potential returns per unit of risk. Smithson Investment Trust is currently generating about 0.03 per unit of volatility. If you would invest 130,400 in Smithson Investment Trust on September 13, 2024 and sell it today you would earn a total of 21,200 from holding Smithson Investment Trust or generate 16.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Central Asia Metals vs. Smithson Investment Trust
Performance |
| Timeline |
| Central Asia Metals |
| Smithson Investment Trust |
Central Asia and Smithson Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Asia and Smithson Investment
The main advantage of trading using opposite Central Asia and Smithson Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Asia position performs unexpectedly, Smithson 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 Smithson Investment will offset losses from the drop in Smithson Investment's long position.| Central Asia vs. Ashtead Technology Holdings | Central Asia vs. L3Harris Technologies | Central Asia vs. Roper Technologies | Central Asia vs. Alliance Data Systems |
| Smithson Investment vs. Ecclesiastical Insurance Office | Smithson Investment vs. Jacquet Metal Service | Smithson Investment vs. Dalata Hotel Group | Smithson Investment vs. Central Asia Metals |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Stocks Directory Find actively traded stocks across global markets | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |