Correlation Between SM Prime and Eco Depot
Can any of the company-specific risk be diversified away by investing in both SM Prime and Eco Depot 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 Prime and Eco Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SM Prime Holdings and Eco Depot, you can compare the effects of market volatilities on SM Prime and Eco Depot 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 Prime with a short position of Eco Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Prime and Eco Depot.
Diversification Opportunities for SM Prime and Eco Depot
Pay attention - limited upside
The 3 months correlation between SPHXF and Eco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SM Prime Holdings and Eco Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Depot and SM Prime 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 Prime Holdings are associated (or correlated) with Eco Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Depot has no effect on the direction of SM Prime i.e., SM Prime and Eco Depot go up and down completely randomly.
Pair Corralation between SM Prime and Eco Depot
Assuming the 90 days horizon SM Prime Holdings is expected to under-perform the Eco Depot. But the pink sheet apears to be less risky and, when comparing its historical volatility, SM Prime Holdings is 8.64 times less risky than Eco Depot. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Eco Depot is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Eco Depot on September 2, 2024 and sell it today you would lose (9.40) from holding Eco Depot or give up 72.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Prime Holdings vs. Eco Depot
Performance |
| Timeline |
| SM Prime Holdings |
| Eco Depot |
SM Prime and Eco Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Prime and Eco Depot
The main advantage of trading using opposite SM Prime and Eco Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Prime position performs unexpectedly, Eco Depot 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 Eco Depot will offset losses from the drop in Eco Depot's long position.The idea behind SM Prime Holdings and Eco Depot pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |