Correlation Between COL Financial and SM Investments
Can any of the company-specific risk be diversified away by investing in both COL Financial and SM Investments 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 COL Financial and SM Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COL Financial Group and SM Investments Corp, you can compare the effects of market volatilities on COL Financial and SM Investments 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 COL Financial with a short position of SM Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of COL Financial and SM Investments.
Diversification Opportunities for COL Financial and SM Investments
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between COL and SM Investments is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding COL Financial Group and SM Investments Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Investments Corp and COL Financial 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 COL Financial Group are associated (or correlated) with SM Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Investments Corp has no effect on the direction of COL Financial i.e., COL Financial and SM Investments go up and down completely randomly.
Pair Corralation between COL Financial and SM Investments
Assuming the 90 days trading horizon COL Financial Group is expected to under-perform the SM Investments. But the stock apears to be less risky and, when comparing its historical volatility, COL Financial Group is 1.18 times less risky than SM Investments. The stock trades about -0.24 of its potential returns per unit of risk. The SM Investments Corp is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 96,400 in SM Investments Corp on August 29, 2024 and sell it today you would lose (6,300) from holding SM Investments Corp or give up 6.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COL Financial Group vs. SM Investments Corp
Performance |
| Timeline |
| COL Financial Group |
| SM Investments Corp |
COL Financial and SM Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COL Financial and SM Investments
The main advantage of trading using opposite COL Financial and SM Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COL Financial position performs unexpectedly, SM Investments 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 SM Investments will offset losses from the drop in SM Investments' long position.| COL Financial vs. VistaREIT | COL Financial vs. Bright Kindle Resources | COL Financial vs. Medco Holdings | COL Financial vs. Allhome Corp |
| SM Investments vs. Manila Mining Corp | SM Investments vs. Metro Retail Stores | SM Investments vs. Atlas Consolidated Mining | SM Investments vs. Converge Information Communications |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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