Correlation Between Saipem SpA and SMG Industries
Can any of the company-specific risk be diversified away by investing in both Saipem SpA and SMG Industries 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 Saipem SpA and SMG Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saipem SpA and SMG Industries, you can compare the effects of market volatilities on Saipem SpA and SMG Industries 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 Saipem SpA with a short position of SMG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saipem SpA and SMG Industries.
Diversification Opportunities for Saipem SpA and SMG Industries
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Saipem and SMG is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Saipem SpA and SMG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMG Industries and Saipem SpA 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 Saipem SpA are associated (or correlated) with SMG Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMG Industries has no effect on the direction of Saipem SpA i.e., Saipem SpA and SMG Industries go up and down completely randomly.
Pair Corralation between Saipem SpA and SMG Industries
Assuming the 90 days horizon Saipem SpA is expected to under-perform the SMG Industries. But the pink sheet apears to be less risky and, when comparing its historical volatility, Saipem SpA is 49.85 times less risky than SMG Industries. The pink sheet trades about -0.18 of its potential returns per unit of risk. The SMG Industries is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 0.05 in SMG Industries on November 28, 2024 and sell it today you would earn a total of 0.06 from holding SMG Industries or generate 120.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Saipem SpA vs. SMG Industries
Performance |
| Timeline |
| Saipem SpA |
| SMG Industries |
Saipem SpA and SMG Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saipem SpA and SMG Industries
The main advantage of trading using opposite Saipem SpA and SMG Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saipem SpA position performs unexpectedly, SMG Industries 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 SMG Industries will offset losses from the drop in SMG Industries' long position.| Saipem SpA vs. Worley Parsons | Saipem SpA vs. Petrofac Ltd ADR | Saipem SpA vs. SMG Industries | Saipem SpA vs. NXT Energy Solutions |
| SMG Industries vs. Worley Parsons | SMG Industries vs. Petrofac Ltd ADR | SMG Industries vs. Saipem SpA | SMG Industries vs. Bri Chem Corp |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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