Correlation Between Kubient and Smith Micro

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

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

Diversification Opportunities for Kubient and Smith Micro

0.25

Correlation Coefficient

Kubient  Smith Micro

Modest diversification

The 3 months correlation between Kubient and Smith is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kubient and Smith Micro Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Micro Software and Kubient 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 Kubient are associated (or correlated) with Smith Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Micro Software has no effect on the direction of Kubient i.e., Kubient and Smith Micro go up and down completely randomly.

Pair Corralation between Kubient and Smith Micro

Given the investment horizon of 90 days Kubient is expected to generate 1.01 times more return on investment than Smith Micro. However, Kubient is 1.01 times more volatile than Smith Micro Software. It trades about 0.02 of its potential returns per unit of risk. Smith Micro Software is currently generating about -0.03 per unit of risk. If you would invest  65.00  in Kubient on September 28, 2024 and sell it today you would lose (8.00) from holding Kubient or give up 12.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	27.42%
Values	Daily Returns

Kubient  vs.  Smith Micro Software

Kubient

Risk-Adjusted Performance

0 of 100

Very Weak

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

Smith Micro Software

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Smith Micro Software are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Smith Micro demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kubient and Smith Micro

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

The idea behind Kubient and Smith Micro Software 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.