Correlation Between Nickel Asia and SM Investments
Can any of the company-specific risk be diversified away by investing in both Nickel Asia 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 Nickel Asia and SM Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nickel Asia Corp and SM Investments Corp, you can compare the effects of market volatilities on Nickel Asia 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 Nickel Asia with a short position of SM Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nickel Asia and SM Investments.
Diversification Opportunities for Nickel Asia and SM Investments
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nickel and SM Investments is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Nickel Asia Corp 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 Nickel 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 Nickel Asia Corp 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 Nickel Asia i.e., Nickel Asia and SM Investments go up and down completely randomly.
Pair Corralation between Nickel Asia and SM Investments
Assuming the 90 days trading horizon Nickel Asia Corp is expected to under-perform the SM Investments. But the stock apears to be less risky and, when comparing its historical volatility, Nickel Asia Corp is 1.66 times less risky than SM Investments. The stock trades about -0.27 of its potential returns per unit of risk. The SM Investments Corp is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 91,700 in SM Investments Corp on September 13, 2024 and sell it today you would lose (3,050) from holding SM Investments Corp or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nickel Asia Corp vs. SM Investments Corp
Performance |
| Timeline |
| Nickel Asia Corp |
| SM Investments Corp |
Nickel Asia and SM Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nickel Asia and SM Investments
The main advantage of trading using opposite Nickel Asia and SM Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nickel Asia 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.| Nickel Asia vs. Lepanto Consolidated Mining | Nickel Asia vs. Apex Mining Co | Nickel Asia vs. SM Investments Corp | Nickel Asia vs. Atlas Consolidated Mining |
| SM Investments vs. Ayala Corp | SM Investments vs. Alliance Global Group | SM Investments vs. DMCI Holdings |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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