Correlation Between SM Investments and Apartment Investment

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

By analyzing existing cross correlation between SM Investments and Apartment Investment and, you can compare the effects of market volatilities on SM Investments and Apartment Investment 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 SM Investments with a short position of Apartment Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Investments and Apartment Investment.

Diversification Opportunities for SM Investments and Apartment Investment

0.46

Correlation Coefficient

SM Investments  Apartment Investment

Very weak diversification

The 3 months correlation between SVTMF and Apartment is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding SM Investments and Apartment Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apartment Investment and and SM Investments 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 SM Investments are associated (or correlated) with Apartment Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apartment Investment and has no effect on the direction of SM Investments i.e., SM Investments and Apartment Investment go up and down completely randomly.

Pair Corralation between SM Investments and Apartment Investment

Assuming the 90 days horizon SM Investments is expected to generate 29.0 times less return on investment than Apartment Investment. But when comparing it to its historical volatility, SM Investments is 38.72 times less risky than Apartment Investment. It trades about 0.13 of its potential returns per unit of risk. Apartment Investment and is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  808.00  in Apartment Investment and on May 1, 2025 and sell it today you would earn a total of  59.00  from holding Apartment Investment and or generate 7.3% return on investment over 90 days.

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

SM Investments  vs.  Apartment Investment and

SM Investments

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SM Investments are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, SM Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Apartment Investment and

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apartment Investment and are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Apartment Investment may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with SM Investments and Apartment Investment

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

The idea behind SM Investments and Apartment Investment and 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.