Correlation Between Smith AO and Helios Technologies

Can any of the company-specific risk be diversified away by investing in both Smith AO and Helios Technologies 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 Smith AO and Helios Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Smith AO and Helios Technologies, you can compare the effects of market volatilities on Smith AO and Helios Technologies 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 Smith AO with a short position of Helios Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith AO and Helios Technologies.

Diversification Opportunities for Smith AO and Helios Technologies

0.42

Correlation Coefficient

Smith AO  Helios Technologies

Very weak diversification

The 3 months correlation between Smith and Helios is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Smith AO and Helios Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helios Technologies and Smith AO 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 Smith AO are associated (or correlated) with Helios Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helios Technologies has no effect on the direction of Smith AO i.e., Smith AO and Helios Technologies go up and down completely randomly.

Pair Corralation between Smith AO and Helios Technologies

Considering the 90-day investment horizon Smith AO is expected to generate 0.66 times more return on investment than Helios Technologies. However, Smith AO is 1.52 times less risky than Helios Technologies. It trades about -0.02 of its potential returns per unit of risk. Helios Technologies is currently generating about -0.2 per unit of risk. If you would invest  6,768  in Smith AO on December 28, 2024 and sell it today you would lose (170.00) from holding Smith AO or give up 2.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Smith AO  vs.  Helios Technologies

Smith AO

Risk-Adjusted Performance

Very Weak

Over the last 90 days Smith AO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Smith AO is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Helios Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Helios Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Smith AO and Helios Technologies

The main advantage of trading using opposite Smith AO and Helios Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smith AO position performs unexpectedly, Helios Technologies 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 Helios Technologies will offset losses from the drop in Helios Technologies' long position.

The idea behind Smith AO and Helios Technologies 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.

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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.