Correlation Between Samart Public and Samart Digital

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

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

Diversification Opportunities for Samart Public and Samart Digital

0.61

Correlation Coefficient

Samart Public  Samart Digital

Poor diversification

The 3 months correlation between Samart and Samart is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Samart Public and Samart Digital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samart Digital Public and Samart Public 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 Samart Public are associated (or correlated) with Samart Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samart Digital Public has no effect on the direction of Samart Public i.e., Samart Public and Samart Digital go up and down completely randomly.

Pair Corralation between Samart Public and Samart Digital

Assuming the 90 days trading horizon Samart Public is expected to generate 45.05 times less return on investment than Samart Digital. But when comparing it to its historical volatility, Samart Public is 12.26 times less risky than Samart Digital. It trades about 0.04 of its potential returns per unit of risk. Samart Digital Public is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Samart Digital Public on September 14, 2024 and sell it today you would earn a total of  2.00  from holding Samart Digital Public or generate 100.0% return on investment over 90 days.

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

Samart Public  vs.  Samart Digital Public

Samart Public

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Samart Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Samart Public is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Samart Digital Public

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samart Digital Public are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Samart Digital disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samart Public and Samart Digital

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

The idea behind Samart Public and Samart Digital Public 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.