Correlation Between Minim and Smartmetric

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

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

Diversification Opportunities for Minim and Smartmetric

0.72

Correlation Coefficient

Minim  Smartmetric

Poor diversification

The 3 months correlation between Minim and Smartmetric is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Minim Inc and Smartmetric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smartmetric and Minim 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 Minim Inc are associated (or correlated) with Smartmetric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smartmetric has no effect on the direction of Minim i.e., Minim and Smartmetric go up and down completely randomly.

Pair Corralation between Minim and Smartmetric

Given the investment horizon of 90 days Minim Inc is expected to under-perform the Smartmetric. But the stock apears to be less risky and, when comparing its historical volatility, Minim Inc is 3.29 times less risky than Smartmetric. The stock trades about -0.13 of its potential returns per unit of risk. The Smartmetric is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.05  in Smartmetric on March 14, 2024 and sell it today you would lose (0.03) from holding Smartmetric or give up 60.0% of portfolio value over 90 days.

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

Minim Inc  vs.  Smartmetric

Minim Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Minim Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Smartmetric

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Smartmetric are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Smartmetric exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Minim and Smartmetric

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

The idea behind Minim Inc and Smartmetric 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.