Correlation Between SCB X and Samart Telcoms

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

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

Diversification Opportunities for SCB X and Samart Telcoms

-0.59

Correlation Coefficient

SCB X  Samart Telcoms

Excellent diversification

The 3 months correlation between SCB and Samart is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding SCB X Public and Samart Telcoms Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samart Telcoms Public and SCB X 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 SCB X Public are associated (or correlated) with Samart Telcoms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samart Telcoms Public has no effect on the direction of SCB X i.e., SCB X and Samart Telcoms go up and down completely randomly.

Pair Corralation between SCB X and Samart Telcoms

Assuming the 90 days trading horizon SCB X Public is expected to under-perform the Samart Telcoms. But the stock apears to be less risky and, when comparing its historical volatility, SCB X Public is 3.23 times less risky than Samart Telcoms. The stock trades about -0.09 of its potential returns per unit of risk. The Samart Telcoms Public is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  600.00  in Samart Telcoms Public on December 4, 2024 and sell it today you would lose (10.00) from holding Samart Telcoms Public or give up 1.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

SCB X Public  vs.  Samart Telcoms Public

SCB X Public

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SCB X Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, SCB X is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Samart Telcoms Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samart Telcoms Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Samart Telcoms is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SCB X and Samart Telcoms

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

The idea behind SCB X Public and Samart Telcoms 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.