Correlation Between SM Investments and LBC Express
Can any of the company-specific risk be diversified away by investing in both SM Investments and LBC Express 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 LBC Express 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 LBC Express Holdings, you can compare the effects of market volatilities on SM Investments and LBC Express 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 LBC Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Investments and LBC Express.
Diversification Opportunities for SM Investments and LBC Express
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between SM Investments and LBC is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding SM Investments Corp and LBC Express Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBC Express Holdings 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 LBC Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBC Express Holdings has no effect on the direction of SM Investments i.e., SM Investments and LBC Express go up and down completely randomly.
Pair Corralation between SM Investments and LBC Express
Assuming the 90 days trading horizon SM Investments Corp is expected to under-perform the LBC Express. But the stock apears to be less risky and, when comparing its historical volatility, SM Investments Corp is 1.58 times less risky than LBC Express. The stock trades about -0.09 of its potential returns per unit of risk. The LBC Express Holdings is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 1,198 in LBC Express Holdings on August 30, 2024 and sell it today you would lose (88.00) from holding LBC Express Holdings or give up 7.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.4% |
| Values | Daily Returns |
SM Investments Corp vs. LBC Express Holdings
Performance |
| Timeline |
| SM Investments Corp |
| LBC Express Holdings |
SM Investments and LBC Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Investments and LBC Express
The main advantage of trading using opposite SM Investments and LBC Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Investments position performs unexpectedly, LBC Express 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 LBC Express will offset losses from the drop in LBC Express' long position.| SM Investments vs. Lepanto Consolidated Mining | SM Investments vs. Manila Mining Corp | SM Investments vs. Metro Retail Stores | SM Investments vs. Atlas Consolidated Mining |
| LBC Express vs. Jollibee Foods Corp | LBC Express vs. Apex Mining Co | LBC Express vs. Philex Mining Corp | LBC Express vs. Integrated Micro Electronics |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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