Correlation Between SMX Public and AMREP

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

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

Diversification Opportunities for SMX Public and AMREP

-0.67

Correlation Coefficient

SMX Public  AMREP

Excellent diversification

The 3 months correlation between SMX and AMREP is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding SMX Public Limited and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP and SMX Public 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 SMX Public Limited are associated (or correlated) with AMREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMREP has no effect on the direction of SMX Public i.e., SMX Public and AMREP go up and down completely randomly.

Pair Corralation between SMX Public and AMREP

Considering the 90-day investment horizon SMX Public Limited is expected to under-perform the AMREP. In addition to that, SMX Public is 5.54 times more volatile than AMREP. It trades about -0.08 of its total potential returns per unit of risk. AMREP is currently generating about 0.2 per unit of volatility. If you would invest  2,210  in AMREP on August 31, 2024 and sell it today you would earn a total of  1,330  from holding AMREP or generate 60.18% return on investment over 90 days.

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

SMX Public Limited  vs.  AMREP

SMX Public Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SMX Public Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

AMREP

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AMREP are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, AMREP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SMX Public and AMREP

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

The idea behind SMX Public Limited and AMREP 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.