Correlation Between SMX Public and Cirmaker Technology

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

Diversification Opportunities for SMX Public and Cirmaker Technology

0.59

Correlation Coefficient

SMX Public  Cirmaker Technology

Very weak diversification

The 3 months correlation between SMX and Cirmaker is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding SMX Public Limited and Cirmaker Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cirmaker Technology 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 Cirmaker Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cirmaker Technology has no effect on the direction of SMX Public i.e., SMX Public and Cirmaker Technology go up and down completely randomly.

Pair Corralation between SMX Public and Cirmaker Technology

Considering the 90-day investment horizon SMX Public Limited is expected to generate 8.25 times more return on investment than Cirmaker Technology. However, SMX Public is 8.25 times more volatile than Cirmaker Technology. It trades about 0.08 of its potential returns per unit of risk. Cirmaker Technology is currently generating about 0.24 per unit of risk. If you would invest  627.00  in SMX Public Limited on October 24, 2024 and sell it today you would lose (174.00) from holding SMX Public Limited or give up 27.75% 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.  Cirmaker Technology

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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Cirmaker Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cirmaker Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, Cirmaker Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SMX Public and Cirmaker Technology

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

The idea behind SMX Public Limited and Cirmaker Technology 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.