Correlation Between Tokyu and SM Investments

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

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

Diversification Opportunities for Tokyu and SM Investments

-0.44

Correlation Coefficient

Tokyu  SM Investments

Very good diversification

The 3 months correlation between Tokyu and SVTMF is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Tokyu and SM Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Investments and Tokyu 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 Tokyu are associated (or correlated) with SM Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Investments has no effect on the direction of Tokyu i.e., Tokyu and SM Investments go up and down completely randomly.

Pair Corralation between Tokyu and SM Investments

If you would invest  1,045  in Tokyu on October 22, 2024 and sell it today you would earn a total of  0.00  from holding Tokyu or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.56%
Values	Daily Returns

Tokyu  vs.  SM Investments

Tokyu

Risk-Adjusted Performance

0 of 100

Very Weak

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

SM Investments

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SM Investments are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, SM Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tokyu and SM Investments

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

The idea behind Tokyu and SM Investments 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.