Correlation Between SMX Public and Unifirst

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

Diversification Opportunities for SMX Public and Unifirst

0.26

Correlation Coefficient

SMX Public  Unifirst

Modest diversification

The 3 months correlation between SMX and Unifirst is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding SMX Public Limited and Unifirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unifirst 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 Unifirst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unifirst has no effect on the direction of SMX Public i.e., SMX Public and Unifirst go up and down completely randomly.

Pair Corralation between SMX Public and Unifirst

Assuming the 90 days horizon SMX Public Limited is expected to generate 6.19 times more return on investment than Unifirst. However, SMX Public is 6.19 times more volatile than Unifirst. It trades about 0.07 of its potential returns per unit of risk. Unifirst is currently generating about 0.04 per unit of risk. If you would invest  5.00  in SMX Public Limited on December 28, 2024 and sell it today you would lose (1.90) from holding SMX Public Limited or give up 38.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.67%
Values	Daily Returns

SMX Public Limited  vs.  Unifirst

SMX Public Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SMX Public Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SMX Public showed solid returns over the last few months and may actually be approaching a breakup point.

Unifirst

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Unifirst are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Unifirst may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SMX Public and Unifirst

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

The idea behind SMX Public Limited and Unifirst 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.