Correlation Between Prime Office and Samart Digital

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

By analyzing existing cross correlation between Prime Office Leasehold and Samart Digital Public, you can compare the effects of market volatilities on Prime Office and Samart Digital 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 Prime Office with a short position of Samart Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Office and Samart Digital.

Diversification Opportunities for Prime Office and Samart Digital

0.48

Correlation Coefficient

Prime Office  Samart Digital

Very weak diversification

The 3 months correlation between Prime and Samart is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Prime Office Leasehold and Samart Digital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samart Digital Public and Prime Office 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 Prime Office Leasehold are associated (or correlated) with Samart Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samart Digital Public has no effect on the direction of Prime Office i.e., Prime Office and Samart Digital go up and down completely randomly.

Pair Corralation between Prime Office and Samart Digital

Assuming the 90 days trading horizon Prime Office Leasehold is expected to under-perform the Samart Digital. But the fund apears to be less risky and, when comparing its historical volatility, Prime Office Leasehold is 12.96 times less risky than Samart Digital. The fund trades about -0.1 of its potential returns per unit of risk. The Samart Digital Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Samart Digital Public on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Samart Digital Public or generate 0.0% return on investment over 90 days.

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

Prime Office Leasehold  vs.  Samart Digital Public

Prime Office Leasehold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prime Office Leasehold has generated negative risk-adjusted returns adding no value to fund investors. Despite quite persistent forward-looking signals, Prime Office is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Samart Digital Public

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Samart Digital Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Samart Digital disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prime Office and Samart Digital

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

The idea behind Prime Office Leasehold and Samart Digital Public 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.