Correlation Between SmarTone Telecommunicatio and Brother Industries

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

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

Diversification Opportunities for SmarTone Telecommunicatio and Brother Industries

0.1

Correlation Coefficient

SmarTone Telecommunicatio  Brother Industries

Average diversification

The 3 months correlation between SmarTone and Brother is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding SmarTone Telecommunications Ho and Brother Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brother Industries and SmarTone 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 SmarTone Telecommunications Holdings are associated (or correlated) with Brother Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brother Industries has no effect on the direction of SmarTone Telecommunicatio i.e., SmarTone Telecommunicatio and Brother Industries go up and down completely randomly.

Pair Corralation between SmarTone Telecommunicatio and Brother Industries

Assuming the 90 days horizon SmarTone Telecommunications Holdings is expected to generate 0.8 times more return on investment than Brother Industries. However, SmarTone Telecommunications Holdings is 1.26 times less risky than Brother Industries. It trades about 0.08 of its potential returns per unit of risk. Brother Industries is currently generating about -0.04 per unit of risk. If you would invest  46.00  in SmarTone Telecommunications Holdings on April 24, 2025 and sell it today you would earn a total of  3.00  from holding SmarTone Telecommunications Holdings or generate 6.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

SmarTone Telecommunications Ho  vs.  Brother Industries

SmarTone Telecommunicatio

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SmarTone Telecommunications Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SmarTone Telecommunicatio may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Brother Industries

Risk-Adjusted Performance

Very Weak

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

Pair Trading with SmarTone Telecommunicatio and Brother Industries

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

The idea behind SmarTone Telecommunications Holdings and Brother Industries 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.