Correlation Between Simt Real and Sit Emerging

Can any of the company-specific risk be diversified away by investing in both Simt Real and Sit Emerging 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 Simt Real and Sit Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Simt Real Return and Sit Emerging Markets, you can compare the effects of market volatilities on Simt Real and Sit Emerging 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 Simt Real with a short position of Sit Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Real and Sit Emerging.

Diversification Opportunities for Simt Real and Sit Emerging

0.43

Correlation Coefficient

Simt Real  Sit Emerging

Very weak diversification

The 3 months correlation between Simt and Sit is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Simt Real Return and Sit Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Emerging Markets and Simt Real 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 Simt Real Return are associated (or correlated) with Sit Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Emerging Markets has no effect on the direction of Simt Real i.e., Simt Real and Sit Emerging go up and down completely randomly.

Pair Corralation between Simt Real and Sit Emerging

Assuming the 90 days horizon Simt Real Return is expected to generate 0.32 times more return on investment than Sit Emerging. However, Simt Real Return is 3.09 times less risky than Sit Emerging. It trades about -0.07 of its potential returns per unit of risk. Sit Emerging Markets is currently generating about -0.17 per unit of risk. If you would invest  964.00  in Simt Real Return on October 8, 2024 and sell it today you would lose (6.00) from holding Simt Real Return or give up 0.62% of portfolio value over 90 days.

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

Simt Real Return  vs.  Sit Emerging Markets

Simt Real Return

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simt Real Return has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Simt Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sit Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sit Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Sit Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Simt Real and Sit Emerging

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

The idea behind Simt Real Return and Sit Emerging Markets 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.