Correlation Between SMX Public and Consol Energy

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

Diversification Opportunities for SMX Public and Consol Energy

-0.32

Correlation Coefficient

SMX Public  Consol Energy

Very good diversification

The 3 months correlation between SMX and Consol is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding SMX Public Limited and Consol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consol Energy 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 Consol Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consol Energy has no effect on the direction of SMX Public i.e., SMX Public and Consol Energy go up and down completely randomly.

Pair Corralation between SMX Public and Consol Energy

Assuming the 90 days horizon SMX Public Limited is expected to generate 23.19 times more return on investment than Consol Energy. However, SMX Public is 23.19 times more volatile than Consol Energy. It trades about 0.11 of its potential returns per unit of risk. Consol Energy is currently generating about 0.06 per unit of risk. If you would invest  11.00  in SMX Public Limited on October 11, 2024 and sell it today you would lose (7.00) from holding SMX Public Limited or give up 63.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.81%
Values	Daily Returns

SMX Public Limited  vs.  Consol Energy

SMX Public Limited

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SMX Public Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, SMX Public showed solid returns over the last few months and may actually be approaching a breakup point.

Consol Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consol Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Consol Energy 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 Consol Energy

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

The idea behind SMX Public Limited and Consol Energy 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.