Correlation Between Simt Real and Optimum Small-mid

Can any of the company-specific risk be diversified away by investing in both Simt Real and Optimum Small-mid 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 Simt Real and Optimum Small-mid into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Simt Real Estate and Optimum Small Mid Cap, you can compare the effects of market volatilities on Simt Real and Optimum Small-mid 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 Simt Real with a short position of Optimum Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Real and Optimum Small-mid.

Diversification Opportunities for Simt Real and Optimum Small-mid

0.5

Correlation Coefficient

Simt Real  Optimum Small-mid

Very weak diversification

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

Pair Corralation between Simt Real and Optimum Small-mid

Assuming the 90 days horizon Simt Real is expected to generate 1.01 times less return on investment than Optimum Small-mid. In addition to that, Simt Real is 1.07 times more volatile than Optimum Small Mid Cap. It trades about 0.07 of its total potential returns per unit of risk. Optimum Small Mid Cap is currently generating about 0.08 per unit of volatility. If you would invest  1,274  in Optimum Small Mid Cap on September 1, 2024 and sell it today you would earn a total of  407.00  from holding Optimum Small Mid Cap or generate 31.95% return on investment over 90 days.

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

Simt Real Estate  vs.  Optimum Small Mid Cap

Simt Real Estate

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Real Estate are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Simt Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Optimum Small Mid

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Optimum Small Mid Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Optimum Small-mid may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Simt Real and Optimum Small-mid

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

The idea behind Simt Real Estate and Optimum Small Mid Cap 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.