Correlation Between SM Investments and Asia United
Can any of the company-specific risk be diversified away by investing in both SM Investments and Asia United 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 SM Investments and Asia United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SM Investments Corp and Asia United Bank, you can compare the effects of market volatilities on SM Investments and Asia United 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 SM Investments with a short position of Asia United. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Investments and Asia United.
Diversification Opportunities for SM Investments and Asia United
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SM Investments and Asia is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding SM Investments Corp and Asia United Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia United Bank and SM Investments 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 SM Investments Corp are associated (or correlated) with Asia United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia United Bank has no effect on the direction of SM Investments i.e., SM Investments and Asia United go up and down completely randomly.
Pair Corralation between SM Investments and Asia United
Assuming the 90 days trading horizon SM Investments is expected to generate 5.17 times less return on investment than Asia United. But when comparing it to its historical volatility, SM Investments Corp is 1.18 times less risky than Asia United. It trades about 0.07 of its potential returns per unit of risk. Asia United Bank is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 6,210 in Asia United Bank on October 10, 2024 and sell it today you would earn a total of 530.00 from holding Asia United Bank or generate 8.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
SM Investments Corp vs. Asia United Bank
Performance |
Timeline |
SM Investments Corp |
Asia United Bank |
SM Investments and Asia United Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SM Investments and Asia United
The main advantage of trading using opposite SM Investments and Asia United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Investments position performs unexpectedly, Asia United 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 Asia United will offset losses from the drop in Asia United's long position.SM Investments vs. Philex Mining Corp | SM Investments vs. Security Bank Corp | SM Investments vs. East West Banking | SM Investments vs. Cebu Air Preferred |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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