Correlation Between Smcp SAS and Blockchain Group

Can any of the company-specific risk be diversified away by investing in both Smcp SAS and Blockchain Group 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 Smcp SAS and Blockchain Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Smcp SAS and Blockchain Group SA, you can compare the effects of market volatilities on Smcp SAS and Blockchain Group 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 Smcp SAS with a short position of Blockchain Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smcp SAS and Blockchain Group.

Diversification Opportunities for Smcp SAS and Blockchain Group

0.78

Correlation Coefficient

Smcp SAS  Blockchain Group

Poor diversification

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

Pair Corralation between Smcp SAS and Blockchain Group

Assuming the 90 days trading horizon Smcp SAS is expected to under-perform the Blockchain Group. But the stock apears to be less risky and, when comparing its historical volatility, Smcp SAS is 1.71 times less risky than Blockchain Group. The stock trades about -0.02 of its potential returns per unit of risk. The Blockchain Group SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  44.00  in Blockchain Group SA on September 29, 2024 and sell it today you would lose (13.00) from holding Blockchain Group SA or give up 29.55% of portfolio value over 90 days.

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

Smcp SAS  vs.  Blockchain Group SA

Smcp SAS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smcp SAS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Smcp SAS sustained solid returns over the last few months and may actually be approaching a breakup point.

Blockchain Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blockchain Group SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Blockchain Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Smcp SAS and Blockchain Group

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

The idea behind Smcp SAS and Blockchain Group SA 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..