Correlation Between SM Investments and Alliance Global
Can any of the company-specific risk be diversified away by investing in both SM Investments and Alliance 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 SM Investments and Alliance Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SM Investments Corp and Alliance Global Group, you can compare the effects of market volatilities on SM Investments and Alliance 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 SM Investments with a short position of Alliance Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Investments and Alliance Global.
Diversification Opportunities for SM Investments and Alliance Global
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SM Investments and Alliance is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SM Investments Corp and Alliance Global Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Global Group and SM Investments 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 SM Investments Corp are associated (or correlated) with Alliance Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Global Group has no effect on the direction of SM Investments i.e., SM Investments and Alliance Global go up and down completely randomly.
Pair Corralation between SM Investments and Alliance Global
Assuming the 90 days trading horizon SM Investments Corp is expected to generate 1.08 times more return on investment than Alliance Global. However, SM Investments is 1.08 times more volatile than Alliance Global Group. It trades about 0.01 of its potential returns per unit of risk. Alliance Global Group is currently generating about -0.02 per unit of risk. If you would invest 87,000 in SM Investments Corp on August 29, 2024 and sell it today you would earn a total of 900.00 from holding SM Investments Corp or generate 1.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Investments Corp vs. Alliance Global Group
Performance |
| Timeline |
| SM Investments Corp |
| Alliance Global Group |
SM Investments and Alliance Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Investments and Alliance Global
The main advantage of trading using opposite SM Investments and Alliance Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Investments position performs unexpectedly, Alliance 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 Alliance Global will offset losses from the drop in Alliance Global's long position.| SM Investments vs. Manila Mining Corp | SM Investments vs. Metro Retail Stores | SM Investments vs. Atlas Consolidated Mining | SM Investments vs. Converge Information Communications |
| Alliance Global vs. Atlas Consolidated Mining | Alliance Global vs. Manila Mining Corp | Alliance Global vs. Apex Mining Co | Alliance Global vs. Crown Asia Chemicals |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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