Correlation Between East Africa and SMART Technologies

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

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

Diversification Opportunities for East Africa and SMART Technologies

0.0

Correlation Coefficient

East Africa  SMART Technologies

Pay attention - limited upside

The 3 months correlation between East and SMART is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding East Africa Metals and SMART Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMART Technologies and East Africa 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 East Africa Metals are associated (or correlated) with SMART Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMART Technologies has no effect on the direction of East Africa i.e., East Africa and SMART Technologies go up and down completely randomly.

Pair Corralation between East Africa and SMART Technologies

If you would invest (100.00) in SMART Technologies on September 24, 2024 and sell it today you would earn a total of  100.00  from holding SMART Technologies or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

East Africa Metals  vs.  SMART Technologies

East Africa Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days East Africa Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SMART Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SMART Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, SMART Technologies is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with East Africa and SMART Technologies

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

The idea behind East Africa Metals and SMART Technologies 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 Global Correlations module to find global opportunities by holding instruments from different markets.