Correlation Between SM Investments and BRNPB

Can any of the company-specific risk be diversified away by investing in both SM Investments and BRNPB 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 BRNPB 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 BRNPB, you can compare the effects of market volatilities on SM Investments and BRNPB 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 BRNPB. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Investments and BRNPB.

Diversification Opportunities for SM Investments and BRNPB

0.0

Correlation Coefficient

SM Investments  BRNPB

Pay attention - limited upside

The 3 months correlation between SM Investments and BRNPB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SM Investments Corp and BRNPB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRNPB 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 BRNPB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRNPB has no effect on the direction of SM Investments i.e., SM Investments and BRNPB go up and down completely randomly.

Pair Corralation between SM Investments and BRNPB

If you would invest (100.00) in BRNPB on October 8, 2024 and sell it today you would earn a total of  100.00  from holding BRNPB or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

SM Investments Corp  vs.  BRNPB

SM Investments Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SM Investments Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

BRNPB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRNPB has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, BRNPB is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SM Investments and BRNPB

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

The idea behind SM Investments Corp and BRNPB 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.