Correlation Between Zenvia and SMC Corp

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

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

Diversification Opportunities for Zenvia and SMC Corp

-0.38

Correlation Coefficient

Zenvia  SMC Corp

Very good diversification

The 3 months correlation between Zenvia and SMC is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Zenvia Inc and SMC Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMC Corp and Zenvia 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 Zenvia Inc are associated (or correlated) with SMC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMC Corp has no effect on the direction of Zenvia i.e., Zenvia and SMC Corp go up and down completely randomly.

Pair Corralation between Zenvia and SMC Corp

Given the investment horizon of 90 days Zenvia Inc is expected to generate 2.93 times more return on investment than SMC Corp. However, Zenvia is 2.93 times more volatile than SMC Corp. It trades about 0.1 of its potential returns per unit of risk. SMC Corp is currently generating about -0.03 per unit of risk. If you would invest  151.00  in Zenvia Inc on September 24, 2024 and sell it today you would earn a total of  47.00  from holding Zenvia Inc or generate 31.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Zenvia Inc  vs.  SMC Corp

Zenvia Inc

Risk-Adjusted Performance

8 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zenvia Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Zenvia showed solid returns over the last few months and may actually be approaching a breakup point.

SMC Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SMC Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, SMC Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Zenvia and SMC Corp

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

The idea behind Zenvia Inc and SMC Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.