Correlation Between Prudential Financial and Smart Digital

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

By analyzing existing cross correlation between Prudential Financial 4125 and Smart Digital Group, you can compare the effects of market volatilities on Prudential Financial and Smart Digital 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 Prudential Financial with a short position of Smart Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and Smart Digital.

Diversification Opportunities for Prudential Financial and Smart Digital

0.72

Correlation Coefficient

Prudential Financial  Smart Digital

Poor diversification

The 3 months correlation between Prudential and Smart is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial 4125 and Smart Digital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Digital Group and Prudential Financial 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 Prudential Financial 4125 are associated (or correlated) with Smart Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Digital Group has no effect on the direction of Prudential Financial i.e., Prudential Financial and Smart Digital go up and down completely randomly.

Pair Corralation between Prudential Financial and Smart Digital

Considering the 90-day investment horizon Prudential Financial is expected to generate 37.03 times less return on investment than Smart Digital. But when comparing it to its historical volatility, Prudential Financial 4125 is 20.14 times less risky than Smart Digital. It trades about 0.1 of its potential returns per unit of risk. Smart Digital Group is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  434.00  in Smart Digital Group on May 16, 2025 and sell it today you would earn a total of  739.00  from holding Smart Digital Group or generate 170.28% return on investment over 90 days.

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

Prudential Financial 4125  vs.  Smart Digital Group

Prudential Financial 4125

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Financial 4125 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Prudential Financial is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Smart Digital Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smart Digital Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Smart Digital displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prudential Financial and Smart Digital

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

The idea behind Prudential Financial 4125 and Smart Digital Group 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.