Correlation Between Small Company and Simt High

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

By analyzing existing cross correlation between Small Pany Value and Simt High Yield, you can compare the effects of market volatilities on Small Company and Simt High 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 Small Company with a short position of Simt High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Company and Simt High.

Diversification Opportunities for Small Company and Simt High

0.75

Correlation Coefficient

Small Company  Simt High

Poor diversification

The 3 months correlation between Small and Simt is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Value and Simt High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt High Yield and Small Company 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 Small Pany Value are associated (or correlated) with Simt High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt High Yield has no effect on the direction of Small Company i.e., Small Company and Simt High go up and down completely randomly.

Pair Corralation between Small Company and Simt High

Assuming the 90 days horizon Small Pany Value is expected to generate 5.25 times more return on investment than Simt High. However, Small Company is 5.25 times more volatile than Simt High Yield. It trades about 0.1 of its potential returns per unit of risk. Simt High Yield is currently generating about 0.3 per unit of risk. If you would invest  3,404  in Small Pany Value on May 21, 2025 and sell it today you would earn a total of  223.00  from holding Small Pany Value or generate 6.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Small Pany Value  vs.  Simt High Yield

Small Pany Value

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Small Pany Value are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Small Company may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Simt High Yield

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simt High Yield are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Simt High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Small Company and Simt High

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

The idea behind Small Pany Value and Simt High Yield 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.