Correlation Between SMA Solar and OAKTRSPECLENDNEW

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

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

Diversification Opportunities for SMA Solar and OAKTRSPECLENDNEW

-0.5

Correlation Coefficient

SMA Solar  OAKTRSPECLENDNEW

Very good diversification

The 3 months correlation between SMA and OAKTRSPECLENDNEW is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and OAKTRSPECLENDNEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OAKTRSPECLENDNEW and SMA Solar 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 SMA Solar Technology are associated (or correlated) with OAKTRSPECLENDNEW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OAKTRSPECLENDNEW has no effect on the direction of SMA Solar i.e., SMA Solar and OAKTRSPECLENDNEW go up and down completely randomly.

Pair Corralation between SMA Solar and OAKTRSPECLENDNEW

Assuming the 90 days horizon SMA Solar Technology is expected to under-perform the OAKTRSPECLENDNEW. In addition to that, SMA Solar is 2.62 times more volatile than OAKTRSPECLENDNEW. It trades about -0.13 of its total potential returns per unit of risk. OAKTRSPECLENDNEW is currently generating about 0.05 per unit of volatility. If you would invest  1,462  in OAKTRSPECLENDNEW on September 4, 2024 and sell it today you would earn a total of  64.00  from holding OAKTRSPECLENDNEW or generate 4.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

SMA Solar Technology  vs.  OAKTRSPECLENDNEW

SMA Solar Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SMA Solar Technology 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 basic 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.

OAKTRSPECLENDNEW

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OAKTRSPECLENDNEW are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, OAKTRSPECLENDNEW is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SMA Solar and OAKTRSPECLENDNEW

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

The idea behind SMA Solar Technology and OAKTRSPECLENDNEW 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..