Correlation Between Smithson Investment and Batm Advanced

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

By analyzing existing cross correlation between Smithson Investment Trust and Batm Advanced Communications, you can compare the effects of market volatilities on Smithson Investment and Batm Advanced 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 Smithson Investment with a short position of Batm Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smithson Investment and Batm Advanced.

Diversification Opportunities for Smithson Investment and Batm Advanced

0.28

Correlation Coefficient

Smithson Investment  Batm Advanced

Modest diversification

The 3 months correlation between Smithson and Batm is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Smithson Investment Trust and Batm Advanced Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batm Advanced Commun and Smithson Investment 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 Smithson Investment Trust are associated (or correlated) with Batm Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batm Advanced Commun has no effect on the direction of Smithson Investment i.e., Smithson Investment and Batm Advanced go up and down completely randomly.

Pair Corralation between Smithson Investment and Batm Advanced

Assuming the 90 days trading horizon Smithson Investment Trust is expected to generate 0.41 times more return on investment than Batm Advanced. However, Smithson Investment Trust is 2.47 times less risky than Batm Advanced. It trades about -0.03 of its potential returns per unit of risk. Batm Advanced Communications is currently generating about -0.16 per unit of risk. If you would invest  147,200  in Smithson Investment Trust on December 24, 2024 and sell it today you would lose (3,200) from holding Smithson Investment Trust or give up 2.17% of portfolio value over 90 days.

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

Smithson Investment Trust  vs.  Batm Advanced Communications

Smithson Investment Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Smithson Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Smithson Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Batm Advanced Commun

Risk-Adjusted Performance

Very Weak

Over the last 90 days Batm Advanced Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Smithson Investment and Batm Advanced

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

The idea behind Smithson Investment Trust and Batm Advanced Communications 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.