Correlation Between SM Prime and Intel
Can any of the company-specific risk be diversified away by investing in both SM Prime and Intel 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 SM Prime and Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SM Prime Holdings and Intel, you can compare the effects of market volatilities on SM Prime and Intel 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 SM Prime with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Prime and Intel.
Diversification Opportunities for SM Prime and Intel
Very good diversification
The 3 months correlation between SPHXF and Intel is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding SM Prime Holdings and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and SM Prime 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 SM Prime Holdings are associated (or correlated) with Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of SM Prime i.e., SM Prime and Intel go up and down completely randomly.
Pair Corralation between SM Prime and Intel
Assuming the 90 days horizon SM Prime Holdings is expected to generate 2.7 times more return on investment than Intel. However, SM Prime is 2.7 times more volatile than Intel. It trades about 0.03 of its potential returns per unit of risk. Intel is currently generating about -0.01 per unit of risk. If you would invest 66.00 in SM Prime Holdings on January 25, 2024 and sell it today you would lose (7.00) from holding SM Prime Holdings or give up 10.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Prime Holdings vs. Intel
Performance |
| Timeline |
| SM Prime Holdings |
| Intel |
SM Prime and Intel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Prime and Intel
The main advantage of trading using opposite SM Prime and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Prime position performs unexpectedly, Intel 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 Intel will offset losses from the drop in Intel's long position.The idea behind SM Prime Holdings and Intel 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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