Correlation Between SiS Distribution and Smart Concrete

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

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

Diversification Opportunities for SiS Distribution and Smart Concrete

-0.66

Correlation Coefficient

SiS Distribution  Smart Concrete

Excellent diversification

The 3 months correlation between SiS and Smart is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding SiS Distribution 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 SiS Distribution 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 SiS Distribution 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 SiS Distribution i.e., SiS Distribution and Smart Concrete go up and down completely randomly.

Pair Corralation between SiS Distribution and Smart Concrete

Assuming the 90 days trading horizon SiS Distribution Public is expected to under-perform the Smart Concrete. In addition to that, SiS Distribution is 2.05 times more volatile than Smart Concrete Public. It trades about 0.0 of its total potential returns per unit of risk. Smart Concrete Public is currently generating about 0.03 per unit of volatility. If you would invest  80.00  in Smart Concrete Public on October 22, 2024 and sell it today you would earn a total of  2.00  from holding Smart Concrete Public or generate 2.5% return on investment over 90 days.

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

SiS Distribution Public  vs.  Smart Concrete Public

SiS Distribution Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SiS Distribution Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, SiS Distribution is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Smart Concrete Public

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Smart Concrete Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Smart Concrete is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SiS Distribution and Smart Concrete

The main advantage of trading using opposite SiS Distribution and Smart Concrete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SiS Distribution 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 SiS Distribution 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.