Correlation Between Philip Morris and Smart Digital

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

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

Diversification Opportunities for Philip Morris and Smart Digital

0.22

Correlation Coefficient

Philip Morris  Smart Digital

Modest diversification

The 3 months correlation between Philip and Smart is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International 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 Philip Morris 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 Philip Morris International 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 Philip Morris i.e., Philip Morris and Smart Digital go up and down completely randomly.

Pair Corralation between Philip Morris and Smart Digital

Allowing for the 90-day total investment horizon Philip Morris International is expected to generate 0.1 times more return on investment than Smart Digital. However, Philip Morris International is 10.48 times less risky than Smart Digital. It trades about -0.13 of its potential returns per unit of risk. Smart Digital Group is currently generating about -0.02 per unit of risk. If you would invest  17,931  in Philip Morris International on July 10, 2025 and sell it today you would lose (2,404) from holding Philip Morris International or give up 13.41% of portfolio value over 90 days.

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

Philip Morris International  vs.  Smart Digital Group

Philip Morris Intern

Risk-Adjusted Performance

Weakest

Over the last 90 days Philip Morris International 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 primary indicators remain very healthy which may send shares a bit higher in November 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Smart Digital Group

Risk-Adjusted Performance

Weakest

Over the last 90 days Smart Digital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in November 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Philip Morris and Smart Digital

The main advantage of trading using opposite Philip Morris and Smart Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris 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 Philip Morris International 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.