Correlation Between SMG Industries and Galenfeha

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

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

Diversification Opportunities for SMG Industries and Galenfeha

-0.13

Correlation Coefficient

SMG Industries  Galenfeha

Good diversification

The 3 months correlation between SMG and Galenfeha is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding SMG Industries and Galenfeha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galenfeha and SMG Industries 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 SMG Industries are associated (or correlated) with Galenfeha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galenfeha has no effect on the direction of SMG Industries i.e., SMG Industries and Galenfeha go up and down completely randomly.

Pair Corralation between SMG Industries and Galenfeha

Given the investment horizon of 90 days SMG Industries is expected to under-perform the Galenfeha. But the pink sheet apears to be less risky and, when comparing its historical volatility, SMG Industries is 4.6 times less risky than Galenfeha. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Galenfeha is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Galenfeha on October 13, 2024 and sell it today you would earn a total of  372.00  from holding Galenfeha or generate 12400.0% return on investment over 90 days.

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

SMG Industries  vs.  Galenfeha

SMG Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SMG Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Galenfeha

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Galenfeha are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Galenfeha demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SMG Industries and Galenfeha

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

The idea behind SMG Industries and Galenfeha 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.