Correlation Between Shenandoah Telecommunicatio and SmarTone Telecommunicatio

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

By analyzing existing cross correlation between Shenandoah Telecommunications and SmarTone Telecommunications Holdings, you can compare the effects of market volatilities on Shenandoah Telecommunicatio and SmarTone Telecommunicatio 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 Shenandoah Telecommunicatio with a short position of SmarTone Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenandoah Telecommunicatio and SmarTone Telecommunicatio.

Diversification Opportunities for Shenandoah Telecommunicatio and SmarTone Telecommunicatio

-0.07

Correlation Coefficient

Shenandoah Telecommunicatio  SmarTone Telecommunicatio

Good diversification

The 3 months correlation between Shenandoah and SmarTone is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Shenandoah Telecommunications and SmarTone Telecommunications Ho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmarTone Telecommunicatio and Shenandoah Telecommunicatio 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 Shenandoah Telecommunications are associated (or correlated) with SmarTone Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmarTone Telecommunicatio has no effect on the direction of Shenandoah Telecommunicatio i.e., Shenandoah Telecommunicatio and SmarTone Telecommunicatio go up and down completely randomly.

Pair Corralation between Shenandoah Telecommunicatio and SmarTone Telecommunicatio

Assuming the 90 days horizon Shenandoah Telecommunications is expected to under-perform the SmarTone Telecommunicatio. In addition to that, Shenandoah Telecommunicatio is 1.75 times more volatile than SmarTone Telecommunications Holdings. It trades about -0.01 of its total potential returns per unit of risk. SmarTone Telecommunications Holdings is currently generating about 0.01 per unit of volatility. If you would invest  48.00  in SmarTone Telecommunications Holdings on March 20, 2025 and sell it today you would lose (1.00) from holding SmarTone Telecommunications Holdings or give up 2.08% of portfolio value over 90 days.

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

Shenandoah Telecommunications  vs.  SmarTone Telecommunications Ho

Shenandoah Telecommunicatio

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shenandoah Telecommunications are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Shenandoah Telecommunicatio may actually be approaching a critical reversion point that can send shares even higher in July 2025.

SmarTone Telecommunicatio

Risk-Adjusted Performance

Very Weak

Over the last 90 days SmarTone Telecommunications Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SmarTone Telecommunicatio is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Shenandoah Telecommunicatio and SmarTone Telecommunicatio

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

The idea behind Shenandoah Telecommunications and SmarTone Telecommunications Holdings 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.