Correlation Between Argentum and Smartmetric

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

By analyzing existing cross correlation between Argentum 47 and Smartmetric, you can compare the effects of market volatilities on Argentum and Smartmetric 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 Argentum with a short position of Smartmetric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argentum and Smartmetric.

Diversification Opportunities for Argentum and Smartmetric

0.33

Correlation Coefficient

Argentum  Smartmetric

Weak diversification

The 3 months correlation between Argentum and Smartmetric is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Argentum 47 and Smartmetric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smartmetric and Argentum 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 Argentum 47 are associated (or correlated) with Smartmetric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smartmetric has no effect on the direction of Argentum i.e., Argentum and Smartmetric go up and down completely randomly.

Pair Corralation between Argentum and Smartmetric

Given the investment horizon of 90 days Argentum 47 is expected to under-perform the Smartmetric. But the pink sheet apears to be less risky and, when comparing its historical volatility, Argentum 47 is 30.45 times less risky than Smartmetric. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Smartmetric is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Smartmetric on September 18, 2024 and sell it today you would lose (0.02) from holding Smartmetric or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Argentum 47  vs.  Smartmetric

Argentum 47

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Argentum 47 has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Smartmetric

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Smartmetric are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, Smartmetric exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Argentum and Smartmetric

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

The idea behind Argentum 47 and Smartmetric 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.