Correlation Between Sabien Technology and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Sabien Technology and SMA Solar 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 Sabien Technology and SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sabien Technology Group and SMA Solar Technology, you can compare the effects of market volatilities on Sabien Technology and SMA Solar 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 Sabien Technology with a short position of SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabien Technology and SMA Solar.
Diversification Opportunities for Sabien Technology and SMA Solar
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sabien and SMA is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sabien Technology Group and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology and Sabien Technology 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 Sabien Technology Group are associated (or correlated) with SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Sabien Technology i.e., Sabien Technology and SMA Solar go up and down completely randomly.
Pair Corralation between Sabien Technology and SMA Solar
Assuming the 90 days trading horizon Sabien Technology Group is expected to generate 1.75 times more return on investment than SMA Solar. However, Sabien Technology is 1.75 times more volatile than SMA Solar Technology. It trades about 0.22 of its potential returns per unit of risk. SMA Solar Technology is currently generating about 0.14 per unit of risk. If you would invest 975.00 in Sabien Technology Group on September 25, 2024 and sell it today you would earn a total of 300.00 from holding Sabien Technology Group or generate 30.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabien Technology Group vs. SMA Solar Technology
Performance |
| Timeline |
| Sabien Technology |
| SMA Solar Technology |
Sabien Technology and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabien Technology and SMA Solar
The main advantage of trading using opposite Sabien Technology and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabien Technology position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| Sabien Technology vs. Abingdon Health Plc | Sabien Technology vs. Induction Healthcare Group | Sabien Technology vs. Eco Animal Health | Sabien Technology vs. United States Steel |
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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