Correlation Between SMX Public and Healthcare Services

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

Diversification Opportunities for SMX Public and Healthcare Services

0.65

Correlation Coefficient

SMX Public  Healthcare Services

Poor diversification

The 3 months correlation between SMX and Healthcare is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding SMX Public Limited and Healthcare Services Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Services 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 Healthcare Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Services has no effect on the direction of SMX Public i.e., SMX Public and Healthcare Services go up and down completely randomly.

Pair Corralation between SMX Public and Healthcare Services

Considering the 90-day investment horizon SMX Public Limited is expected to under-perform the Healthcare Services. In addition to that, SMX Public is 6.04 times more volatile than Healthcare Services Group. It trades about -0.34 of its total potential returns per unit of risk. Healthcare Services Group is currently generating about -0.09 per unit of volatility. If you would invest  1,152  in Healthcare Services Group on December 29, 2024 and sell it today you would lose (117.00) from holding Healthcare Services Group or give up 10.16% of portfolio value over 90 days.

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

SMX Public Limited  vs.  Healthcare Services 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.

Healthcare Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Healthcare Services Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SMX Public and Healthcare Services

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

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