Correlation Between SMC Investment and Elcom Technology
Can any of the company-specific risk be diversified away by investing in both SMC Investment and Elcom Technology 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 SMC Investment and Elcom Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMC Investment Trading and Elcom Technology Communications, you can compare the effects of market volatilities on SMC Investment and Elcom Technology 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 SMC Investment with a short position of Elcom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMC Investment and Elcom Technology.
Diversification Opportunities for SMC Investment and Elcom Technology
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SMC and Elcom is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding SMC Investment Trading and Elcom Technology Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elcom Technology Com and SMC Investment 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 SMC Investment Trading are associated (or correlated) with Elcom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elcom Technology Com has no effect on the direction of SMC Investment i.e., SMC Investment and Elcom Technology go up and down completely randomly.
Pair Corralation between SMC Investment and Elcom Technology
Assuming the 90 days trading horizon SMC Investment Trading is expected to under-perform the Elcom Technology. In addition to that, SMC Investment is 1.62 times more volatile than Elcom Technology Communications. It trades about -0.22 of its total potential returns per unit of risk. Elcom Technology Communications is currently generating about -0.01 per unit of volatility. If you would invest 2,790,000 in Elcom Technology Communications on October 25, 2024 and sell it today you would lose (20,000) from holding Elcom Technology Communications or give up 0.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMC Investment Trading vs. Elcom Technology Communication
Performance |
| Timeline |
| SMC Investment Trading |
| Elcom Technology Com |
SMC Investment and Elcom Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMC Investment and Elcom Technology
The main advantage of trading using opposite SMC Investment and Elcom Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMC Investment position performs unexpectedly, Elcom Technology 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 Elcom Technology will offset losses from the drop in Elcom Technology's long position.| SMC Investment vs. Dinhvu Port Investment | SMC Investment vs. Elcom Technology Communications | SMC Investment vs. Japan Vietnam Medical | SMC Investment vs. Vinhomes JSC |
| Elcom Technology vs. FIT INVEST JSC | Elcom Technology vs. Damsan JSC | Elcom Technology vs. An Phat Plastic | Elcom Technology vs. APG Securities Joint |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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