Correlation Between ERecord Management and SM Investments

Can any of the company-specific risk be diversified away by investing in both ERecord Management and SM Investments 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 ERecord Management and SM Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for ERecord Management and SM Investments

0.0

Correlation Coefficient

ERecord Management  SM Investments

Pay attention - limited upside

The 3 months correlation between ERecord and SVTMF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ERecord Management and SM Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Investments and ERecord Management 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 ERecord Management are associated (or correlated) with SM Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Investments has no effect on the direction of ERecord Management i.e., ERecord Management and SM Investments go up and down completely randomly.

Pair Corralation between ERecord Management and SM Investments

If you would invest  1,550  in SM Investments on October 25, 2024 and sell it today you would lose (9.00) from holding SM Investments or give up 0.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ERecord Management  vs.  SM Investments

ERecord Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ERecord Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, ERecord Management is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

SM Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SM Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, SM Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ERecord Management and SM Investments

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

The idea behind ERecord Management and SM Investments 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 Stocks Directory module to find actively traded stocks across global markets.