Correlation Between SMX Public and Brambles

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

Diversification Opportunities for SMX Public and Brambles

0.42

Correlation Coefficient

SMX Public  Brambles

Very weak diversification

The 3 months correlation between SMX and Brambles is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding SMX Public Limited and Brambles Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brambles ADR 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 Brambles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brambles ADR has no effect on the direction of SMX Public i.e., SMX Public and Brambles go up and down completely randomly.

Pair Corralation between SMX Public and Brambles

Considering the 90-day investment horizon SMX Public Limited is expected to generate 29.42 times more return on investment than Brambles. However, SMX Public is 29.42 times more volatile than Brambles Ltd ADR. It trades about 0.09 of its potential returns per unit of risk. Brambles Ltd ADR is currently generating about -0.06 per unit of risk. If you would invest  605.00  in SMX Public Limited on October 26, 2024 and sell it today you would lose (192.00) from holding SMX Public Limited or give up 31.74% of portfolio value over 90 days.

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

SMX Public Limited  vs.  Brambles Ltd ADR

SMX Public Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SMX Public Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent primary indicators, SMX Public showed solid returns over the last few months and may actually be approaching a breakup point.

Brambles ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brambles Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Brambles is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SMX Public and Brambles

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

The idea behind SMX Public Limited and Brambles Ltd ADR 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 Stocks Directory module to find actively traded stocks across global markets.