Correlation Between Simt Small and Saat Defensive

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

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

Diversification Opportunities for Simt Small and Saat Defensive

0.9

Correlation Coefficient

Simt Small  Saat Defensive

Almost no diversification

The 3 months correlation between Simt and Saat is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Simt Small Cap and Saat Defensive Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saat Defensive Strategy and Simt Small 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 Small Cap are associated (or correlated) with Saat Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saat Defensive Strategy has no effect on the direction of Simt Small i.e., Simt Small and Saat Defensive go up and down completely randomly.

Pair Corralation between Simt Small and Saat Defensive

Assuming the 90 days horizon Simt Small Cap is expected to generate 27.09 times more return on investment than Saat Defensive. However, Simt Small is 27.09 times more volatile than Saat Defensive Strategy. It trades about 0.14 of its potential returns per unit of risk. Saat Defensive Strategy is currently generating about 0.43 per unit of risk. If you would invest  3,644  in Simt Small Cap on September 14, 2024 and sell it today you would earn a total of  386.00  from holding Simt Small Cap or generate 10.59% return on investment over 90 days.

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

Simt Small Cap  vs.  Saat Defensive Strategy

Simt Small Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Small Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Simt Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Saat Defensive Strategy

Risk-Adjusted Performance

33 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Saat Defensive Strategy are ranked lower than 33 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Saat Defensive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Simt Small and Saat Defensive

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

The idea behind Simt Small Cap and Saat Defensive Strategy 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.