Correlation Between SM Investments and 210385AB6

Can any of the company-specific risk be diversified away by investing in both SM Investments and 210385AB6 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 210385AB6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SM Investments and CEG 56 01 MAR 28, you can compare the effects of market volatilities on SM Investments and 210385AB6 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 210385AB6. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Investments and 210385AB6.

Diversification Opportunities for SM Investments and 210385AB6

0.05

Correlation Coefficient

SM Investments  210385AB6

Significant diversification

The 3 months correlation between SVTMF and 210385AB6 is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding SM Investments and CEG 56 01 MAR 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEG 56 01 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 210385AB6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEG 56 01 has no effect on the direction of SM Investments i.e., SM Investments and 210385AB6 go up and down completely randomly.

Pair Corralation between SM Investments and 210385AB6

Assuming the 90 days horizon SM Investments is expected to under-perform the 210385AB6. In addition to that, SM Investments is 3.07 times more volatile than CEG 56 01 MAR 28. It trades about -0.19 of its total potential returns per unit of risk. CEG 56 01 MAR 28 is currently generating about -0.04 per unit of volatility. If you would invest  10,199  in CEG 56 01 MAR 28 on December 25, 2024 and sell it today you would lose (124.00) from holding CEG 56 01 MAR 28 or give up 1.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	91.67%
Values	Daily Returns

SM Investments  vs.  CEG 56 01 MAR 28

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 unsteady 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.

CEG 56 01

Risk-Adjusted Performance

Very Weak

Over the last 90 days CEG 56 01 MAR 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 210385AB6 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SM Investments and 210385AB6

The main advantage of trading using opposite SM Investments and 210385AB6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Investments position performs unexpectedly, 210385AB6 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 210385AB6 will offset losses from the drop in 210385AB6's long position.

The idea behind SM Investments and CEG 56 01 MAR 28 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.