Correlation Between Simt Real and Kopernik International

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

By analyzing existing cross correlation between Simt Real Estate and Kopernik International Fund, you can compare the effects of market volatilities on Simt Real and Kopernik International 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 Simt Real with a short position of Kopernik International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Real and Kopernik International.

Diversification Opportunities for Simt Real and Kopernik International

0.33

Correlation Coefficient

Simt Real  Kopernik International

Weak diversification

The 3 months correlation between Simt and Kopernik is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Simt Real Estate and Kopernik International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kopernik International and Simt Real 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 Simt Real Estate are associated (or correlated) with Kopernik International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kopernik International has no effect on the direction of Simt Real i.e., Simt Real and Kopernik International go up and down completely randomly.

Pair Corralation between Simt Real and Kopernik International

Assuming the 90 days horizon Simt Real is expected to generate 5.48 times less return on investment than Kopernik International. In addition to that, Simt Real is 1.5 times more volatile than Kopernik International Fund. It trades about 0.04 of its total potential returns per unit of risk. Kopernik International Fund is currently generating about 0.32 per unit of volatility. If you would invest  1,286  in Kopernik International Fund on December 20, 2024 and sell it today you would earn a total of  182.00  from holding Kopernik International Fund or generate 14.15% return on investment over 90 days.

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

Simt Real Estate  vs.  Kopernik International Fund

Simt Real Estate

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Real Estate are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Simt Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kopernik International

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Kopernik International Fund are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Kopernik International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Simt Real and Kopernik International

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

The idea behind Simt Real Estate and Kopernik International Fund 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.