Correlation Between Samart Digital and PCS Machine

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

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

Diversification Opportunities for Samart Digital and PCS Machine

-0.52

Correlation Coefficient

Samart Digital  PCS Machine

Excellent diversification

The 3 months correlation between Samart and PCS is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Samart Digital Public and PCS Machine Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCS Machine Group and Samart Digital 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 Digital Public are associated (or correlated) with PCS Machine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCS Machine Group has no effect on the direction of Samart Digital i.e., Samart Digital and PCS Machine go up and down completely randomly.

Pair Corralation between Samart Digital and PCS Machine

Assuming the 90 days trading horizon Samart Digital is expected to generate 2.04 times less return on investment than PCS Machine. But when comparing it to its historical volatility, Samart Digital Public is 2.95 times less risky than PCS Machine. It trades about 0.06 of its potential returns per unit of risk. PCS Machine Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  469.00  in PCS Machine Group on September 13, 2024 and sell it today you would lose (41.00) from holding PCS Machine Group or give up 8.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Samart Digital Public  vs.  PCS Machine Group

Samart Digital Public

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samart Digital Public are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Samart Digital disclosed solid returns over the last few months and may actually be approaching a breakup point.

PCS Machine Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PCS Machine Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, PCS Machine is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Samart Digital and PCS Machine

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

The idea behind Samart Digital Public and PCS Machine Group 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.