Correlation Between SMC Corp and Next Hydrogen
Can any of the company-specific risk be diversified away by investing in both SMC Corp and Next Hydrogen 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 Corp and Next Hydrogen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMC Corp Japan and Next Hydrogen Solutions, you can compare the effects of market volatilities on SMC Corp and Next Hydrogen 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 Corp with a short position of Next Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMC Corp and Next Hydrogen.
Diversification Opportunities for SMC Corp and Next Hydrogen
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SMC and Next is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding SMC Corp Japan and Next Hydrogen Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Hydrogen Solutions and SMC Corp 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 Corp Japan are associated (or correlated) with Next Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Hydrogen Solutions has no effect on the direction of SMC Corp i.e., SMC Corp and Next Hydrogen go up and down completely randomly.
Pair Corralation between SMC Corp and Next Hydrogen
Assuming the 90 days horizon SMC Corp Japan is expected to under-perform the Next Hydrogen. But the pink sheet apears to be less risky and, when comparing its historical volatility, SMC Corp Japan is 4.94 times less risky than Next Hydrogen. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Next Hydrogen Solutions is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 30.00 in Next Hydrogen Solutions on November 27, 2024 and sell it today you would earn a total of 10.00 from holding Next Hydrogen Solutions or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMC Corp Japan vs. Next Hydrogen Solutions
Performance |
| Timeline |
| SMC Corp Japan |
| Next Hydrogen Solutions |
SMC Corp and Next Hydrogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMC Corp and Next Hydrogen
The main advantage of trading using opposite SMC Corp and Next Hydrogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMC Corp position performs unexpectedly, Next Hydrogen 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 Next Hydrogen will offset losses from the drop in Next Hydrogen's long position.| SMC Corp vs. Schneider Electric SE | SMC Corp vs. Atlas Copco AB | SMC Corp vs. Fanuc | SMC Corp vs. Sandvik AB |
| Next Hydrogen vs. Weir Group PLC | Next Hydrogen vs. Greenshift Corp | Next Hydrogen vs. Quality Industrial Corp | Next Hydrogen vs. ITM Power Plc |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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