Correlation Between Henderson Investment and SM Investments

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

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

Diversification Opportunities for Henderson Investment and SM Investments

0.28

Correlation Coefficient

Henderson Investment  SM Investments

Modest diversification

The 3 months correlation between Henderson and SVTMF is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Henderson Investment Ltd and SM Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Investments and Henderson 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 Henderson Investment Ltd 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 Henderson Investment i.e., Henderson Investment and SM Investments go up and down completely randomly.

Pair Corralation between Henderson Investment and SM Investments

If you would invest  3.50  in Henderson Investment Ltd on December 21, 2024 and sell it today you would earn a total of  0.00  from holding Henderson Investment Ltd or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.33%
Values	Daily Returns

Henderson Investment Ltd  vs.  SM Investments

Henderson Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Henderson Investment Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Henderson Investment is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

SM Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days SM Investments 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 primary indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Henderson Investment and SM Investments

The main advantage of trading using opposite Henderson Investment and SM Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henderson Investment 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 Henderson Investment Ltd 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 Global Correlations module to find global opportunities by holding instruments from different markets.