Correlation Between Jacquet Metal and SMA Solar

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

By analyzing existing cross correlation between Jacquet Metal Service and SMA Solar Technology, you can compare the effects of market volatilities on Jacquet Metal and SMA Solar 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 Jacquet Metal with a short position of SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacquet Metal and SMA Solar.

Diversification Opportunities for Jacquet Metal and SMA Solar

0.37

Correlation Coefficient

Jacquet Metal  SMA Solar

Weak diversification

The 3 months correlation between Jacquet and SMA is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Jacquet Metal Service and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology and Jacquet Metal 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 Jacquet Metal Service are associated (or correlated) with SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Jacquet Metal i.e., Jacquet Metal and SMA Solar go up and down completely randomly.

Pair Corralation between Jacquet Metal and SMA Solar

Assuming the 90 days horizon Jacquet Metal Service is expected to generate 0.45 times more return on investment than SMA Solar. However, Jacquet Metal Service is 2.2 times less risky than SMA Solar. It trades about 0.0 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.06 per unit of risk. If you would invest  1,613  in Jacquet Metal Service on October 22, 2024 and sell it today you would lose (127.00) from holding Jacquet Metal Service or give up 7.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Jacquet Metal Service  vs.  SMA Solar Technology

Jacquet Metal Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jacquet Metal Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SMA Solar Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SMA Solar Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SMA Solar may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Jacquet Metal and SMA Solar

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

The idea behind Jacquet Metal Service and SMA Solar Technology 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.