Correlation Between Weebit Nano and Smart Global

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

By analyzing existing cross correlation between Weebit Nano Limited and Smart Global Holdings, you can compare the effects of market volatilities on Weebit Nano and Smart Global 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 Weebit Nano with a short position of Smart Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weebit Nano and Smart Global.

Diversification Opportunities for Weebit Nano and Smart Global

-0.43

Correlation Coefficient

Weebit Nano  Smart Global

Very good diversification

The 3 months correlation between Weebit and Smart is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Weebit Nano Limited and Smart Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Global Holdings and Weebit Nano 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 Weebit Nano Limited are associated (or correlated) with Smart Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Global Holdings has no effect on the direction of Weebit Nano i.e., Weebit Nano and Smart Global go up and down completely randomly.

Pair Corralation between Weebit Nano and Smart Global

If you would invest  144.00  in Weebit Nano Limited on September 19, 2024 and sell it today you would earn a total of  42.00  from holding Weebit Nano Limited or generate 29.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	2.38%
Values	Daily Returns

Weebit Nano Limited  vs.  Smart Global Holdings

Weebit Nano Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Weebit Nano Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Weebit Nano reported solid returns over the last few months and may actually be approaching a breakup point.

Smart Global Holdings

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Smart Global Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly unfluctuating technical and fundamental indicators, Smart Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Weebit Nano and Smart Global

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

The idea behind Weebit Nano Limited and Smart Global Holdings 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.