Correlation Between SM Investments and First Abacus
Can any of the company-specific risk be diversified away by investing in both SM Investments and First Abacus 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 First Abacus 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 First Abacus Financial, you can compare the effects of market volatilities on SM Investments and First Abacus 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 First Abacus. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Investments and First Abacus.
Diversification Opportunities for SM Investments and First Abacus
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SM Investments and First is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding SM Investments Corp and First Abacus Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Abacus Financial 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 First Abacus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Abacus Financial has no effect on the direction of SM Investments i.e., SM Investments and First Abacus go up and down completely randomly.
Pair Corralation between SM Investments and First Abacus
Assuming the 90 days trading horizon SM Investments Corp is expected to generate 0.33 times more return on investment than First Abacus. However, SM Investments Corp is 3.04 times less risky than First Abacus. It trades about -0.14 of its potential returns per unit of risk. First Abacus Financial is currently generating about -0.11 per unit of risk. If you would invest 95,950 in SM Investments Corp on September 21, 2024 and sell it today you would lose (7,650) from holding SM Investments Corp or give up 7.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 39.13% |
| Values | Daily Returns |
SM Investments Corp vs. First Abacus Financial
Performance |
| Timeline |
| SM Investments Corp |
| First Abacus Financial |
SM Investments and First Abacus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Investments and First Abacus
The main advantage of trading using opposite SM Investments and First Abacus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Investments position performs unexpectedly, First Abacus 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 First Abacus will offset losses from the drop in First Abacus' long position.The idea behind SM Investments Corp and First Abacus Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| First Abacus vs. Jollibee Foods Corp | First Abacus vs. STI Education Systems | First Abacus vs. SM Investments Corp | First Abacus vs. Asia United Bank |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |