Correlation Between Smart Global and Mineral Mountain

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

By analyzing existing cross correlation between Smart Global Holdings and Mineral Mountain Mining, you can compare the effects of market volatilities on Smart Global and Mineral Mountain 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 Smart Global with a short position of Mineral Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Global and Mineral Mountain.

Diversification Opportunities for Smart Global and Mineral Mountain

-0.49

Correlation Coefficient

Smart Global  Mineral Mountain

Very good diversification

The 3 months correlation between Smart and Mineral is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Smart Global Holdings and Mineral Mountain Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mineral Mountain Mining and Smart Global 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 Smart Global Holdings are associated (or correlated) with Mineral Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mineral Mountain Mining has no effect on the direction of Smart Global i.e., Smart Global and Mineral Mountain go up and down completely randomly.

Pair Corralation between Smart Global and Mineral Mountain

Considering the 90-day investment horizon Smart Global is expected to generate 71.95 times less return on investment than Mineral Mountain. But when comparing it to its historical volatility, Smart Global Holdings is 18.07 times less risky than Mineral Mountain. It trades about 0.02 of its potential returns per unit of risk. Mineral Mountain Mining is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Mineral Mountain Mining on October 2, 2024 and sell it today you would earn a total of  0.00  from holding Mineral Mountain Mining or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	77.29%
Values	Daily Returns

Smart Global Holdings  vs.  Mineral Mountain Mining

Smart Global Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smart Global Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Smart Global is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Mineral Mountain Mining

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mineral Mountain Mining are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Mineral Mountain displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Smart Global and Mineral Mountain

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

The idea behind Smart Global Holdings and Mineral Mountain Mining 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.