Correlation Between SGF Capital and Smart Concrete

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

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

Diversification Opportunities for SGF Capital and Smart Concrete

0.86

Correlation Coefficient

SGF Capital  Smart Concrete

Very poor diversification

The 3 months correlation between SGF and Smart is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SGF Capital Public and Smart Concrete Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Concrete Public and SGF Capital 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 SGF Capital Public are associated (or correlated) with Smart Concrete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Concrete Public has no effect on the direction of SGF Capital i.e., SGF Capital and Smart Concrete go up and down completely randomly.

Pair Corralation between SGF Capital and Smart Concrete

Assuming the 90 days trading horizon SGF Capital Public is expected to under-perform the Smart Concrete. In addition to that, SGF Capital is 2.71 times more volatile than Smart Concrete Public. It trades about -0.17 of its total potential returns per unit of risk. Smart Concrete Public is currently generating about -0.16 per unit of volatility. If you would invest  82.00  in Smart Concrete Public on October 6, 2024 and sell it today you would lose (8.00) from holding Smart Concrete Public or give up 9.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.56%
Values	Daily Returns

SGF Capital Public  vs.  Smart Concrete Public

SGF Capital Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SGF Capital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Smart Concrete Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SGF Capital and Smart Concrete

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

The idea behind SGF Capital Public and Smart Concrete 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.