Correlation Between SM Investments and Encounter Technologi

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

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

Diversification Opportunities for SM Investments and Encounter Technologi

0.0

Correlation Coefficient

SM Investments  Encounter Technologi

Pay attention - limited upside

The 3 months correlation between SVTMF and Encounter is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SM Investments and Encounter Technologi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encounter Technologi and SM Investments 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 SM Investments are associated (or correlated) with Encounter Technologi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encounter Technologi has no effect on the direction of SM Investments i.e., SM Investments and Encounter Technologi go up and down completely randomly.

Pair Corralation between SM Investments and Encounter Technologi

If you would invest  0.00  in Encounter Technologi on December 21, 2024 and sell it today you would earn a total of  0.00  from holding Encounter Technologi or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	89.83%
Values	Daily Returns

SM Investments  vs.  Encounter Technologi

SM Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days SM Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Encounter Technologi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Encounter Technologi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Encounter Technologi is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with SM Investments and Encounter Technologi

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

The idea behind SM Investments and Encounter Technologi 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.