Correlation Between Galenfeha and SMG Industries

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

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

Diversification Opportunities for Galenfeha and SMG Industries

-0.08

Correlation Coefficient

Galenfeha  SMG Industries

Good diversification

The 3 months correlation between Galenfeha and SMG is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Galenfeha and SMG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMG Industries and Galenfeha 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 Galenfeha are associated (or correlated) with SMG Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMG Industries has no effect on the direction of Galenfeha i.e., Galenfeha and SMG Industries go up and down completely randomly.

Pair Corralation between Galenfeha and SMG Industries

If you would invest  2.80  in Galenfeha on September 24, 2024 and sell it today you would earn a total of  1,047  from holding Galenfeha or generate 37400.0% return on investment over 90 days.

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

Galenfeha  vs.  SMG Industries

Galenfeha

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Galenfeha are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical and fundamental indicators, Galenfeha demonstrated solid returns over the last few months and may actually be approaching a breakup point.

SMG Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SMG Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Galenfeha and SMG Industries

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

The idea behind Galenfeha and SMG Industries 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.