Correlation Between SM Investments and SSI

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

Diversification Opportunities for SM Investments and SSI

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between SM Investments and SSI is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding SM Investments Corp and SSI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSI Group 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 SSI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSI Group has no effect on the direction of SM Investments i.e., SM Investments and SSI go up and down completely randomly.

Pair Corralation between SM Investments and SSI

Assuming the 90 days trading horizon SM Investments is expected to generate 4.74 times less return on investment than SSI. In addition to that, SM Investments is 1.09 times more volatile than SSI Group. It trades about 0.01 of its total potential returns per unit of risk. SSI Group is currently generating about 0.05 per unit of volatility. If you would invest  296.00  in SSI Group on September 23, 2024 and sell it today you would earn a total of  5.00  from holding SSI Group or generate 1.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

SM Investments Corp  vs.  SSI Group

 Performance 
       Timeline  
SM Investments Corp 

Risk-Adjusted Performance

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Strong
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 unsteady 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.
SSI Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SSI Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

SM Investments and SSI Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SM Investments and SSI

The main advantage of trading using opposite SM Investments and SSI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Investments position performs unexpectedly, SSI 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 SSI will offset losses from the drop in SSI's long position.
The idea behind SM Investments Corp and SSI Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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