Correlation Between De Grey and SMA Solar
Can any of the company-specific risk be diversified away by investing in both De Grey and SMA Solar 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 De Grey and SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and SMA Solar Technology, you can compare the effects of market volatilities on De Grey and SMA Solar 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 De Grey with a short position of SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and SMA Solar.
Diversification Opportunities for De Grey and SMA Solar
Very good diversification
The 3 months correlation between DGD and SMA is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology and De Grey 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 De Grey Mining are associated (or correlated) with SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of De Grey i.e., De Grey and SMA Solar go up and down completely randomly.
Pair Corralation between De Grey and SMA Solar
Assuming the 90 days trading horizon De Grey Mining is expected to under-perform the SMA Solar. But the stock apears to be less risky and, when comparing its historical volatility, De Grey Mining is 2.08 times less risky than SMA Solar. The stock trades about -0.05 of its potential returns per unit of risk. The SMA Solar Technology is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,510 in SMA Solar Technology on October 11, 2024 and sell it today you would earn a total of 99.00 from holding SMA Solar Technology or generate 6.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Grey Mining vs. SMA Solar Technology
Performance |
| Timeline |
| De Grey Mining |
| SMA Solar Technology |
De Grey and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and SMA Solar
The main advantage of trading using opposite De Grey and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| De Grey vs. LANDSEA GREEN MANAGEMENT | De Grey vs. Coor Service Management | De Grey vs. CVW CLEANTECH INC | De Grey vs. China Resources Beer |
| SMA Solar vs. De Grey Mining | SMA Solar vs. Austevoll Seafood ASA | SMA Solar vs. Yanzhou Coal Mining | SMA Solar vs. Ebro Foods SA |
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.
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