Correlation Between SMA Solar and Globex Mining

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

By analyzing existing cross correlation between SMA Solar Technology and Globex Mining Enterprises, you can compare the effects of market volatilities on SMA Solar and Globex Mining 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 SMA Solar with a short position of Globex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Globex Mining.

Diversification Opportunities for SMA Solar and Globex Mining

0.39

Correlation Coefficient

SMA Solar  Globex Mining

Weak diversification

The 3 months correlation between SMA and Globex is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Globex Mining Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globex Mining Enterprises and SMA Solar 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 SMA Solar Technology are associated (or correlated) with Globex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globex Mining Enterprises has no effect on the direction of SMA Solar i.e., SMA Solar and Globex Mining go up and down completely randomly.

Pair Corralation between SMA Solar and Globex Mining

Assuming the 90 days horizon SMA Solar Technology is expected to under-perform the Globex Mining. In addition to that, SMA Solar is 2.01 times more volatile than Globex Mining Enterprises. It trades about -0.06 of its total potential returns per unit of risk. Globex Mining Enterprises is currently generating about 0.06 per unit of volatility. If you would invest  52.00  in Globex Mining Enterprises on March 21, 2025 and sell it today you would earn a total of  38.00  from holding Globex Mining Enterprises or generate 73.08% return on investment over 90 days.

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

SMA Solar Technology  vs.  Globex Mining Enterprises

SMA Solar Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days SMA Solar Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Globex Mining Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globex Mining Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SMA Solar and Globex Mining

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

The idea behind SMA Solar Technology and Globex Mining Enterprises 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.