Correlation Between Surge Battery and Simply Better

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

By analyzing existing cross correlation between Surge Battery Metals and Simply Better Brands, you can compare the effects of market volatilities on Surge Battery and Simply Better 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 Surge Battery with a short position of Simply Better. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surge Battery and Simply Better.

Diversification Opportunities for Surge Battery and Simply Better

-0.65

Correlation Coefficient

Surge Battery  Simply Better

Excellent diversification

The 3 months correlation between Surge and Simply is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Surge Battery Metals and Simply Better Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simply Better Brands and Surge Battery 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 Surge Battery Metals are associated (or correlated) with Simply Better. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simply Better Brands has no effect on the direction of Surge Battery i.e., Surge Battery and Simply Better go up and down completely randomly.

Pair Corralation between Surge Battery and Simply Better

Assuming the 90 days trading horizon Surge Battery is expected to generate 8.51 times less return on investment than Simply Better. But when comparing it to its historical volatility, Surge Battery Metals is 1.18 times less risky than Simply Better. It trades about 0.03 of its potential returns per unit of risk. Simply Better Brands is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  58.00  in Simply Better Brands on October 1, 2024 and sell it today you would earn a total of  51.00  from holding Simply Better Brands or generate 87.93% return on investment over 90 days.

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

Surge Battery Metals  vs.  Simply Better Brands

Surge Battery Metals

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Surge Battery Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak essential indicators, Surge Battery may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Simply Better Brands

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simply Better Brands are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental drivers, Simply Better showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Surge Battery and Simply Better

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

The idea behind Surge Battery Metals and Simply Better Brands 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.