Correlation Between SM Investments and RFM Corp
Can any of the company-specific risk be diversified away by investing in both SM Investments and RFM Corp 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 RFM Corp 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 RFM Corp, you can compare the effects of market volatilities on SM Investments and RFM Corp 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 RFM Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Investments and RFM Corp.
Diversification Opportunities for SM Investments and RFM Corp
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SM Investments and RFM is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding SM Investments Corp and RFM Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RFM Corp 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 RFM Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RFM Corp has no effect on the direction of SM Investments i.e., SM Investments and RFM Corp go up and down completely randomly.
Pair Corralation between SM Investments and RFM Corp
Assuming the 90 days trading horizon SM Investments is expected to generate 1.72 times less return on investment than RFM Corp. But when comparing it to its historical volatility, SM Investments Corp is 1.02 times less risky than RFM Corp. It trades about 0.01 of its potential returns per unit of risk. RFM Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 369.00 in RFM Corp on August 29, 2024 and sell it today you would earn a total of 11.00 from holding RFM Corp or generate 2.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.37% |
| Values | Daily Returns |
SM Investments Corp vs. RFM Corp
Performance |
| Timeline |
| SM Investments Corp |
| RFM Corp |
SM Investments and RFM Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Investments and RFM Corp
The main advantage of trading using opposite SM Investments and RFM Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Investments position performs unexpectedly, RFM Corp 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 RFM Corp will offset losses from the drop in RFM Corp'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 |
| RFM Corp vs. Swift Foods | RFM Corp vs. Allhome Corp | RFM Corp vs. Jollibee Foods Corp | RFM Corp vs. LFM Properties 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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