Correlation Between SMA SOLAR and CHRYSALIS INVESTMENTS

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

By analyzing existing cross correlation between SMA SOLAR T and CHRYSALIS INVESTMENTS LTD, you can compare the effects of market volatilities on SMA SOLAR and CHRYSALIS 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 SMA SOLAR with a short position of CHRYSALIS INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA SOLAR and CHRYSALIS INVESTMENTS.

Diversification Opportunities for SMA SOLAR and CHRYSALIS INVESTMENTS

-0.47

Correlation Coefficient

SMA SOLAR  CHRYSALIS INVESTMENTS

Very good diversification

The 3 months correlation between SMA and CHRYSALIS is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding SMA SOLAR T and CHRYSALIS INVESTMENTS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHRYSALIS INVESTMENTS LTD and SMA SOLAR 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 SMA SOLAR T are associated (or correlated) with CHRYSALIS INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHRYSALIS INVESTMENTS LTD has no effect on the direction of SMA SOLAR i.e., SMA SOLAR and CHRYSALIS INVESTMENTS go up and down completely randomly.

Pair Corralation between SMA SOLAR and CHRYSALIS INVESTMENTS

Assuming the 90 days horizon SMA SOLAR T is expected to generate 4.48 times more return on investment than CHRYSALIS INVESTMENTS. However, SMA SOLAR is 4.48 times more volatile than CHRYSALIS INVESTMENTS LTD. It trades about 0.17 of its potential returns per unit of risk. CHRYSALIS INVESTMENTS LTD is currently generating about -0.06 per unit of risk. If you would invest  120.00  in SMA SOLAR T on December 21, 2024 and sell it today you would earn a total of  116.00  from holding SMA SOLAR T or generate 96.67% return on investment over 90 days.

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

SMA SOLAR T  vs.  CHRYSALIS INVESTMENTS LTD

SMA SOLAR T

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SMA SOLAR T are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, SMA SOLAR reported solid returns over the last few months and may actually be approaching a breakup point.

CHRYSALIS INVESTMENTS LTD

Risk-Adjusted Performance

Very Weak

Over the last 90 days CHRYSALIS INVESTMENTS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

Pair Trading with SMA SOLAR and CHRYSALIS INVESTMENTS

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

The idea behind SMA SOLAR T and CHRYSALIS INVESTMENTS LTD 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.