Correlation Between Smart Digital and Modine Manufacturing

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

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

Diversification Opportunities for Smart Digital and Modine Manufacturing

0.28

Correlation Coefficient

Smart Digital  Modine Manufacturing

Modest diversification

The 3 months correlation between Smart and Modine is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Smart Digital Group and Modine Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modine Manufacturing and Smart Digital 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 Smart Digital Group are associated (or correlated) with Modine Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modine Manufacturing has no effect on the direction of Smart Digital i.e., Smart Digital and Modine Manufacturing go up and down completely randomly.

Pair Corralation between Smart Digital and Modine Manufacturing

Considering the 90-day investment horizon Smart Digital Group is expected to generate 4.23 times more return on investment than Modine Manufacturing. However, Smart Digital is 4.23 times more volatile than Modine Manufacturing. It trades about 0.17 of its potential returns per unit of risk. Modine Manufacturing is currently generating about 0.21 per unit of risk. If you would invest  569.00  in Smart Digital Group on May 24, 2025 and sell it today you would earn a total of  800.00  from holding Smart Digital Group or generate 140.6% return on investment over 90 days.

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

Smart Digital Group  vs.  Modine Manufacturing

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.

Modine Manufacturing

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Modine Manufacturing are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Modine Manufacturing exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Smart Digital and Modine Manufacturing

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

The idea behind Smart Digital Group and Modine Manufacturing 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.