Correlation Between SMA Solar and PAX GLOBAL
Can any of the company-specific risk be diversified away by investing in both SMA Solar and PAX GLOBAL 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 PAX GLOBAL 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 PAX GLOBAL TECH, you can compare the effects of market volatilities on SMA Solar and PAX GLOBAL 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 PAX GLOBAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and PAX GLOBAL.
Diversification Opportunities for SMA Solar and PAX GLOBAL
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SMA and PAX is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and PAX GLOBAL TECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAX GLOBAL TECH 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 PAX GLOBAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAX GLOBAL TECH has no effect on the direction of SMA Solar i.e., SMA Solar and PAX GLOBAL go up and down completely randomly.
Pair Corralation between SMA Solar and PAX GLOBAL
Assuming the 90 days horizon SMA Solar Technology is expected to under-perform the PAX GLOBAL. But the stock apears to be less risky and, when comparing its historical volatility, SMA Solar Technology is 1.57 times less risky than PAX GLOBAL. The stock trades about -0.14 of its potential returns per unit of risk. The PAX GLOBAL TECH is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 23.00 in PAX GLOBAL TECH on September 4, 2024 and sell it today you would earn a total of 40.00 from holding PAX GLOBAL TECH or generate 173.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. PAX GLOBAL TECH
Performance |
| Timeline |
| SMA Solar Technology |
| PAX GLOBAL TECH |
SMA Solar and PAX GLOBAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and PAX GLOBAL
The main advantage of trading using opposite SMA Solar and PAX GLOBAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, PAX GLOBAL 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 PAX GLOBAL will offset losses from the drop in PAX GLOBAL's long position.| SMA Solar vs. Hyatt Hotels | SMA Solar vs. Meli Hotels International | SMA Solar vs. Xenia Hotels Resorts | SMA Solar vs. ANTA SPORTS PRODUCT |
| PAX GLOBAL vs. Methode Electronics | PAX GLOBAL vs. ELECTRONIC ARTS | PAX GLOBAL vs. LPKF Laser Electronics | PAX GLOBAL vs. KOOL2PLAY SA ZY |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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