Correlation Between SupplyMe Capital and SM Energy

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

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

Diversification Opportunities for SupplyMe Capital and SM Energy

-0.46

Correlation Coefficient

SupplyMe Capital  SM Energy

Very good diversification

The 3 months correlation between SupplyMe and 0KZA is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding SupplyMe Capital PLC and SM Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Energy and SupplyMe Capital 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 SupplyMe Capital PLC are associated (or correlated) with SM Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Energy has no effect on the direction of SupplyMe Capital i.e., SupplyMe Capital and SM Energy go up and down completely randomly.

Pair Corralation between SupplyMe Capital and SM Energy

Assuming the 90 days trading horizon SupplyMe Capital PLC is expected to under-perform the SM Energy. In addition to that, SupplyMe Capital is 4.84 times more volatile than SM Energy Co. It trades about -0.07 of its total potential returns per unit of risk. SM Energy Co is currently generating about 0.05 per unit of volatility. If you would invest  4,227  in SM Energy Co on September 4, 2024 and sell it today you would earn a total of  257.00  from holding SM Energy Co or generate 6.08% return on investment over 90 days.

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

SupplyMe Capital PLC  vs.  SM Energy Co

SupplyMe Capital PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SupplyMe Capital PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

SM Energy

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SM Energy Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SM Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SupplyMe Capital and SM Energy

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

The idea behind SupplyMe Capital PLC and SM Energy Co 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.