Correlation Between Smcp SAS and Damartex

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

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

Diversification Opportunities for Smcp SAS and Damartex

-0.04

Correlation Coefficient

Smcp SAS  Damartex

Good diversification

The 3 months correlation between Smcp and Damartex is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Smcp SAS and Damartex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Damartex and Smcp SAS 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 Smcp SAS are associated (or correlated) with Damartex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Damartex has no effect on the direction of Smcp SAS i.e., Smcp SAS and Damartex go up and down completely randomly.

Pair Corralation between Smcp SAS and Damartex

Assuming the 90 days trading horizon Smcp SAS is expected to generate 3.42 times more return on investment than Damartex. However, Smcp SAS is 3.42 times more volatile than Damartex. It trades about 0.27 of its potential returns per unit of risk. Damartex is currently generating about -0.6 per unit of risk. If you would invest  297.00  in Smcp SAS on September 25, 2024 and sell it today you would earn a total of  52.00  from holding Smcp SAS or generate 17.51% return on investment over 90 days.

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

Smcp SAS  vs.  Damartex

Smcp SAS

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smcp SAS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Smcp SAS sustained solid returns over the last few months and may actually be approaching a breakup point.

Damartex

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Damartex are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Damartex is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Smcp SAS and Damartex

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

The idea behind Smcp SAS and Damartex 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.