Correlation Between SMA Solar and Geratherm Medical
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Geratherm Medical 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 Geratherm Medical 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 Geratherm Medical AG, you can compare the effects of market volatilities on SMA Solar and Geratherm Medical 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 Geratherm Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Geratherm Medical.
Diversification Opportunities for SMA Solar and Geratherm Medical
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SMA and Geratherm is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Geratherm Medical AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geratherm Medical 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 Geratherm Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geratherm Medical has no effect on the direction of SMA Solar i.e., SMA Solar and Geratherm Medical go up and down completely randomly.
Pair Corralation between SMA Solar and Geratherm Medical
Assuming the 90 days horizon SMA Solar Technology is expected to under-perform the Geratherm Medical. But the stock apears to be less risky and, when comparing its historical volatility, SMA Solar Technology is 1.09 times less risky than Geratherm Medical. The stock trades about -0.17 of its potential returns per unit of risk. The Geratherm Medical AG is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 427.00 in Geratherm Medical AG on September 3, 2024 and sell it today you would earn a total of 83.00 from holding Geratherm Medical AG or generate 19.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Geratherm Medical AG
Performance |
| Timeline |
| SMA Solar Technology |
| Geratherm Medical |
SMA Solar and Geratherm Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Geratherm Medical
The main advantage of trading using opposite SMA Solar and Geratherm Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Geratherm Medical 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 Geratherm Medical will offset losses from the drop in Geratherm Medical's long position.| SMA Solar vs. Superior Plus Corp | SMA Solar vs. NMI Holdings | SMA Solar vs. Origin Agritech | SMA Solar vs. SIVERS SEMICONDUCTORS AB |
| Geratherm Medical vs. Stryker | Geratherm Medical vs. Insulet | Geratherm Medical vs. Superior Plus Corp | Geratherm Medical vs. NMI 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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