Correlation Between Simt Large and Simt E

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

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

Diversification Opportunities for Simt Large and Simt E

0.56

Correlation Coefficient

Simt Large  Simt E

Very weak diversification

The 3 months correlation between Simt and Simt is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Simt Large Cap and Simt E Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt E Fixed and Simt Large 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 Simt Large Cap are associated (or correlated) with Simt E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt E Fixed has no effect on the direction of Simt Large i.e., Simt Large and Simt E go up and down completely randomly.

Pair Corralation between Simt Large and Simt E

Assuming the 90 days horizon Simt Large Cap is expected to generate 2.49 times more return on investment than Simt E. However, Simt Large is 2.49 times more volatile than Simt E Fixed. It trades about 0.35 of its potential returns per unit of risk. Simt E Fixed is currently generating about 0.04 per unit of risk. If you would invest  3,963  in Simt Large Cap on April 25, 2025 and sell it today you would earn a total of  740.00  from holding Simt Large Cap or generate 18.67% return on investment over 90 days.

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

Simt Large Cap  vs.  Simt E Fixed

Simt Large Cap

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Large Cap are ranked lower than 27 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Simt Large showed solid returns over the last few months and may actually be approaching a breakup point.

Simt E Fixed

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Simt E Fixed are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Simt E is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Simt Large and Simt E

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

The idea behind Simt Large Cap and Simt E Fixed 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.