Correlation Between SMX Public and Geo

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

Diversification Opportunities for SMX Public and Geo

0.22

Correlation Coefficient

SMX Public  Geo

Modest diversification

The 3 months correlation between SMX and Geo is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding SMX Public Limited and Geo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geo Group 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 Geo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geo Group has no effect on the direction of SMX Public i.e., SMX Public and Geo go up and down completely randomly.

Pair Corralation between SMX Public and Geo

Considering the 90-day investment horizon SMX Public Limited is expected to under-perform the Geo. In addition to that, SMX Public is 5.88 times more volatile than Geo Group. It trades about -0.05 of its total potential returns per unit of risk. Geo Group is currently generating about 0.03 per unit of volatility. If you would invest  2,829  in Geo Group on December 25, 2024 and sell it today you would earn a total of  83.00  from holding Geo Group or generate 2.93% return on investment over 90 days.

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

SMX Public Limited  vs.  Geo Group

SMX Public Limited

Risk-Adjusted Performance

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

Geo Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Geo Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Geo may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SMX Public and Geo

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

The idea behind SMX Public Limited and Geo Group 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.