Correlation Between SM Investments and Top Frontier
Can any of the company-specific risk be diversified away by investing in both SM Investments and Top Frontier 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 Top Frontier 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 Top Frontier Investment, you can compare the effects of market volatilities on SM Investments and Top Frontier 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 Top Frontier. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Investments and Top Frontier.
Diversification Opportunities for SM Investments and Top Frontier
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between SM Investments and Top is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding SM Investments Corp and Top Frontier Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Frontier Investment 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 Top Frontier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Frontier Investment has no effect on the direction of SM Investments i.e., SM Investments and Top Frontier go up and down completely randomly.
Pair Corralation between SM Investments and Top Frontier
Assuming the 90 days trading horizon SM Investments Corp is expected to under-perform the Top Frontier. But the stock apears to be less risky and, when comparing its historical volatility, SM Investments Corp is 1.41 times less risky than Top Frontier. The stock trades about -0.11 of its potential returns per unit of risk. The Top Frontier Investment is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 6,770 in Top Frontier Investment on August 29, 2024 and sell it today you would earn a total of 30.00 from holding Top Frontier Investment or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.36% |
| Values | Daily Returns |
SM Investments Corp vs. Top Frontier Investment
Performance |
| Timeline |
| SM Investments Corp |
| Top Frontier Investment |
SM Investments and Top Frontier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Investments and Top Frontier
The main advantage of trading using opposite SM Investments and Top Frontier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Investments position performs unexpectedly, Top Frontier 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 Top Frontier will offset losses from the drop in Top Frontier'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 |
| Top Frontier vs. Allhome Corp | Top Frontier vs. Jollibee Foods Corp | Top Frontier vs. LFM Properties Corp | Top Frontier vs. Altus Property Ventures |
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.
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