Correlation Between SMA Solar and Superior Plus
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Superior Plus 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 SMA Solar and Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and Superior Plus Corp, you can compare the effects of market volatilities on SMA Solar and Superior Plus 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 SMA Solar with a short position of Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Superior Plus.
Diversification Opportunities for SMA Solar and Superior Plus
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SMA and Superior is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp and SMA Solar 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 SMA Solar Technology are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of SMA Solar i.e., SMA Solar and Superior Plus go up and down completely randomly.
Pair Corralation between SMA Solar and Superior Plus
Assuming the 90 days horizon SMA Solar Technology is expected to under-perform the Superior Plus. In addition to that, SMA Solar is 1.46 times more volatile than Superior Plus Corp. It trades about -0.26 of its total potential returns per unit of risk. Superior Plus Corp is currently generating about -0.09 per unit of volatility. If you would invest 575.00 in Superior Plus Corp on August 25, 2024 and sell it today you would lose (177.00) from holding Superior Plus Corp or give up 30.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Superior Plus Corp
Performance |
| Timeline |
| SMA Solar Technology |
| Superior Plus Corp |
SMA Solar and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Superior Plus
The main advantage of trading using opposite SMA Solar and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| SMA Solar vs. Superior Plus Corp | SMA Solar vs. Origin Agritech | SMA Solar vs. Identiv | SMA Solar vs. INTUITIVE SURGICAL |
| Superior Plus vs. Fast Retailing Co | Superior Plus vs. Auto Trader Group | Superior Plus vs. Monster Beverage Corp | Superior Plus vs. Suntory Beverage Food |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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