Correlation Between Smithson Investment and Ocean Harvest
Can any of the company-specific risk be diversified away by investing in both Smithson Investment and Ocean Harvest 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 Smithson Investment and Ocean Harvest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smithson Investment Trust and Ocean Harvest Technology, you can compare the effects of market volatilities on Smithson Investment and Ocean Harvest 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 Smithson Investment with a short position of Ocean Harvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smithson Investment and Ocean Harvest.
Diversification Opportunities for Smithson Investment and Ocean Harvest
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Smithson and Ocean is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Smithson Investment Trust and Ocean Harvest Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Harvest Technology and Smithson 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 Smithson Investment Trust are associated (or correlated) with Ocean Harvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Harvest Technology has no effect on the direction of Smithson Investment i.e., Smithson Investment and Ocean Harvest go up and down completely randomly.
Pair Corralation between Smithson Investment and Ocean Harvest
Assuming the 90 days trading horizon Smithson Investment Trust is expected to generate 0.4 times more return on investment than Ocean Harvest. However, Smithson Investment Trust is 2.49 times less risky than Ocean Harvest. It trades about 0.01 of its potential returns per unit of risk. Ocean Harvest Technology is currently generating about -0.05 per unit of risk. If you would invest 142,900 in Smithson Investment Trust on August 31, 2024 and sell it today you would earn a total of 6,100 from holding Smithson Investment Trust or generate 4.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.5% |
| Values | Daily Returns |
Smithson Investment Trust vs. Ocean Harvest Technology
Performance |
| Timeline |
| Smithson Investment Trust |
| Ocean Harvest Technology |
Smithson Investment and Ocean Harvest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smithson Investment and Ocean Harvest
The main advantage of trading using opposite Smithson Investment and Ocean Harvest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smithson Investment position performs unexpectedly, Ocean Harvest 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 Ocean Harvest will offset losses from the drop in Ocean Harvest's long position.| Smithson Investment vs. Spirent Communications plc | Smithson Investment vs. Ally Financial | Smithson Investment vs. MT Bank Corp | Smithson Investment vs. Synchrony Financial |
| Ocean Harvest vs. Quadrise Plc | Ocean Harvest vs. ImmuPharma PLC | Ocean Harvest vs. Intuitive Investments Group | Ocean Harvest vs. European Metals Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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