Correlation Between Damartex and Smcp SAS

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

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

Diversification Opportunities for Damartex and Smcp SAS

-0.04

Correlation Coefficient

Damartex  Smcp SAS

Good diversification

The 3 months correlation between Damartex and Smcp is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Damartex and Smcp SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smcp SAS and Damartex 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 Damartex are associated (or correlated) with Smcp SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smcp SAS has no effect on the direction of Damartex i.e., Damartex and Smcp SAS go up and down completely randomly.

Pair Corralation between Damartex and Smcp SAS

Assuming the 90 days trading horizon Damartex is expected to under-perform the Smcp SAS. But the stock apears to be less risky and, when comparing its historical volatility, Damartex is 3.42 times less risky than Smcp SAS. The stock trades about -0.6 of its potential returns per unit of risk. The Smcp SAS is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  297.00  in Smcp SAS on September 25, 2024 and sell it today you would earn a total of  52.00  from holding Smcp SAS or generate 17.51% return on investment over 90 days.

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

Damartex  vs.  Smcp SAS

Damartex

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Damartex are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Damartex is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Smcp SAS

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smcp SAS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Smcp SAS sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Damartex and Smcp SAS

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

The idea behind Damartex and Smcp SAS 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.