Correlation Between Smithson Investment and SupplyMe Capital
Can any of the company-specific risk be diversified away by investing in both Smithson Investment and SupplyMe Capital 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 SupplyMe Capital 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 SupplyMe Capital PLC, you can compare the effects of market volatilities on Smithson Investment and SupplyMe Capital 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 SupplyMe Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smithson Investment and SupplyMe Capital.
Diversification Opportunities for Smithson Investment and SupplyMe Capital
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Smithson and SupplyMe is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Smithson Investment Trust and SupplyMe Capital PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SupplyMe Capital PLC 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 SupplyMe Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SupplyMe Capital PLC has no effect on the direction of Smithson Investment i.e., Smithson Investment and SupplyMe Capital go up and down completely randomly.
Pair Corralation between Smithson Investment and SupplyMe Capital
Assuming the 90 days trading horizon Smithson Investment Trust is expected to generate 0.16 times more return on investment than SupplyMe Capital. However, Smithson Investment Trust is 6.13 times less risky than SupplyMe Capital. It trades about 0.02 of its potential returns per unit of risk. SupplyMe Capital PLC is currently generating about -0.07 per unit of risk. If you would invest 139,900 in Smithson Investment Trust on September 12, 2024 and sell it today you would earn a total of 11,500 from holding Smithson Investment Trust or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Smithson Investment Trust vs. SupplyMe Capital PLC
Performance |
| Timeline |
| Smithson Investment Trust |
| SupplyMe Capital PLC |
Smithson Investment and SupplyMe Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smithson Investment and SupplyMe Capital
The main advantage of trading using opposite Smithson Investment and SupplyMe Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smithson Investment position performs unexpectedly, SupplyMe Capital 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 SupplyMe Capital will offset losses from the drop in SupplyMe Capital's long position.| Smithson Investment vs. Samsung Electronics Co | Smithson Investment vs. Samsung Electronics Co | Smithson Investment vs. Hyundai Motor | Smithson Investment vs. Toyota Motor Corp |
| SupplyMe Capital vs. Hochschild Mining plc | SupplyMe Capital vs. AcadeMedia AB | SupplyMe Capital vs. Coor Service Management | SupplyMe Capital vs. Hollywood Bowl 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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