Correlation Between SMX Public and ESGL Holdings
Can any of the company-specific risk be diversified away by investing in both SMX Public and ESGL Holdings 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 SMX Public and ESGL Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMX Public Limited and ESGL Holdings Limited, you can compare the effects of market volatilities on SMX Public and ESGL Holdings 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 SMX Public with a short position of ESGL Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMX Public and ESGL Holdings.
Diversification Opportunities for SMX Public and ESGL Holdings
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SMX and ESGL is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding SMX Public Limited and ESGL Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESGL Holdings Limited and SMX Public 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 SMX Public Limited are associated (or correlated) with ESGL Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESGL Holdings Limited has no effect on the direction of SMX Public i.e., SMX Public and ESGL Holdings go up and down completely randomly.
Pair Corralation between SMX Public and ESGL Holdings
Considering the 90-day investment horizon SMX Public Limited is expected to under-perform the ESGL Holdings. But the stock apears to be less risky and, when comparing its historical volatility, SMX Public Limited is 1.31 times less risky than ESGL Holdings. The stock trades about -0.38 of its potential returns per unit of risk. The ESGL Holdings Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1.10 in ESGL Holdings Limited on August 30, 2024 and sell it today you would earn a total of 0.59 from holding ESGL Holdings Limited or generate 53.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.7% |
| Values | Daily Returns |
SMX Public Limited vs. ESGL Holdings Limited
Performance |
| Timeline |
| SMX Public Limited |
| ESGL Holdings Limited |
SMX Public and ESGL Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMX Public and ESGL Holdings
The main advantage of trading using opposite SMX Public and ESGL Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMX Public position performs unexpectedly, ESGL Holdings 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 ESGL Holdings will offset losses from the drop in ESGL Holdings' long position.| SMX Public vs. CRA International | SMX Public vs. ICF International | SMX Public vs. Forrester Research | SMX Public vs. Huron Consulting Group |
| ESGL Holdings vs. CRA International | ESGL Holdings vs. ICF International | ESGL Holdings vs. Forrester Research | ESGL Holdings vs. Huron Consulting Group |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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