Correlation Between Schweiter Technologies and SM Energy

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

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

Diversification Opportunities for Schweiter Technologies and SM Energy

-0.07

Correlation Coefficient

Schweiter Technologies  SM Energy

Good diversification

The 3 months correlation between Schweiter and 0KZA is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Schweiter Technologies AG and SM Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Energy and Schweiter Technologies 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 Schweiter Technologies AG 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 Schweiter Technologies i.e., Schweiter Technologies and SM Energy go up and down completely randomly.

Pair Corralation between Schweiter Technologies and SM Energy

Assuming the 90 days trading horizon Schweiter Technologies AG is expected to generate 0.96 times more return on investment than SM Energy. However, Schweiter Technologies AG is 1.04 times less risky than SM Energy. It trades about 0.04 of its potential returns per unit of risk. SM Energy Co is currently generating about 0.03 per unit of risk. If you would invest  38,600  in Schweiter Technologies AG on September 15, 2024 and sell it today you would earn a total of  1,800  from holding Schweiter Technologies AG or generate 4.66% return on investment over 90 days.

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

Schweiter Technologies AG  vs.  SM Energy Co

Schweiter Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Schweiter Technologies AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Schweiter Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SM Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SM Energy Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SM Energy is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Schweiter Technologies and SM Energy

The main advantage of trading using opposite Schweiter Technologies and SM Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schweiter Technologies 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 Schweiter Technologies AG 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.