Correlation Between Smart Concrete and SiS Distribution

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

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

Diversification Opportunities for Smart Concrete and SiS Distribution

-0.65

Correlation Coefficient

Smart Concrete  SiS Distribution

Excellent diversification

The 3 months correlation between Smart and SiS is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Smart Concrete Public and SiS Distribution Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SiS Distribution Public and Smart Concrete 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 Concrete Public are associated (or correlated) with SiS Distribution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SiS Distribution Public has no effect on the direction of Smart Concrete i.e., Smart Concrete and SiS Distribution go up and down completely randomly.

Pair Corralation between Smart Concrete and SiS Distribution

Assuming the 90 days trading horizon Smart Concrete Public is expected to under-perform the SiS Distribution. But the stock apears to be less risky and, when comparing its historical volatility, Smart Concrete Public is 2.5 times less risky than SiS Distribution. The stock trades about -0.16 of its potential returns per unit of risk. The SiS Distribution Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,575  in SiS Distribution Public on October 6, 2024 and sell it today you would earn a total of  175.00  from holding SiS Distribution Public or generate 6.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.56%
Values	Daily Returns

Smart Concrete Public  vs.  SiS Distribution Public

Smart Concrete Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smart Concrete Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Smart Concrete is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

SiS Distribution Public

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SiS Distribution Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, SiS Distribution may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Smart Concrete and SiS Distribution

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

The idea behind Smart Concrete Public and SiS Distribution 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.