Correlation Between SSMTF and Naturally Splendid

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

By analyzing existing cross correlation between SSMTF and Naturally Splendid Enterprises, you can compare the effects of market volatilities on SSMTF and Naturally Splendid 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 SSMTF with a short position of Naturally Splendid. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSMTF and Naturally Splendid.

Diversification Opportunities for SSMTF and Naturally Splendid

1.0

Correlation Coefficient

SSMTF  Naturally Splendid

No risk reduction

The 3 months correlation between SSMTF and Naturally is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SSMTF and Naturally Splendid Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturally Splendid and SSMTF 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 SSMTF are associated (or correlated) with Naturally Splendid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturally Splendid has no effect on the direction of SSMTF i.e., SSMTF and Naturally Splendid go up and down completely randomly.

Pair Corralation between SSMTF and Naturally Splendid

If you would invest  4.00  in Naturally Splendid Enterprises on October 25, 2024 and sell it today you would earn a total of  0.00  from holding Naturally Splendid Enterprises or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	54.24%
Values	Daily Returns

SSMTF  vs.  Naturally Splendid Enterprises

SSMTF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSMTF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SSMTF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Naturally Splendid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Naturally Splendid Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Naturally Splendid is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SSMTF and Naturally Splendid

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

The idea behind SSMTF and Naturally Splendid Enterprises 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.