Correlation Between SM Investments and Concepcion Industrial
Can any of the company-specific risk be diversified away by investing in both SM Investments and Concepcion Industrial 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 Concepcion Industrial 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 Concepcion Industrial Corp, you can compare the effects of market volatilities on SM Investments and Concepcion Industrial 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 Concepcion Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Investments and Concepcion Industrial.
Diversification Opportunities for SM Investments and Concepcion Industrial
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SM Investments and Concepcion is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SM Investments Corp and Concepcion Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concepcion Industrial 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 Concepcion Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concepcion Industrial has no effect on the direction of SM Investments i.e., SM Investments and Concepcion Industrial go up and down completely randomly.
Pair Corralation between SM Investments and Concepcion Industrial
Assuming the 90 days trading horizon SM Investments Corp is expected to under-perform the Concepcion Industrial. In addition to that, SM Investments is 1.36 times more volatile than Concepcion Industrial Corp. It trades about -0.16 of its total potential returns per unit of risk. Concepcion Industrial Corp is currently generating about -0.08 per unit of volatility. If you would invest 1,400 in Concepcion Industrial Corp on September 2, 2024 and sell it today you would lose (50.00) from holding Concepcion Industrial Corp or give up 3.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Investments Corp vs. Concepcion Industrial Corp
Performance |
| Timeline |
| SM Investments Corp |
| Concepcion Industrial |
SM Investments and Concepcion Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Investments and Concepcion Industrial
The main advantage of trading using opposite SM Investments and Concepcion Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Investments position performs unexpectedly, Concepcion Industrial 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 Concepcion Industrial will offset losses from the drop in Concepcion Industrial's long position.| SM Investments vs. Crown Asia Chemicals | SM Investments vs. Concepcion Industrial Corp | SM Investments vs. Union Bank of | SM Investments vs. Manulife Financial 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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