Correlation Between SMX Public and VSE

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

Diversification Opportunities for SMX Public and VSE

-0.56

Correlation Coefficient

SMX Public  VSE

Excellent diversification

The 3 months correlation between SMX and VSE is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding SMX Public Limited and VSE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VSE Corporation 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 VSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VSE Corporation has no effect on the direction of SMX Public i.e., SMX Public and VSE go up and down completely randomly.

Pair Corralation between SMX Public and VSE

Considering the 90-day investment horizon SMX Public Limited is expected to under-perform the VSE. In addition to that, SMX Public is 6.29 times more volatile than VSE Corporation. It trades about -0.05 of its total potential returns per unit of risk. VSE Corporation is currently generating about 0.14 per unit of volatility. If you would invest  9,770  in VSE Corporation on December 26, 2024 and sell it today you would earn a total of  2,759  from holding VSE Corporation or generate 28.24% return on investment over 90 days.

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

SMX Public Limited  vs.  VSE Corp.

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.

VSE Corporation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VSE Corporation are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, VSE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SMX Public and VSE

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

The idea behind SMX Public Limited and VSE Corporation 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.