Correlation Between Koryo Credit and SCI Information

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

By analyzing existing cross correlation between Koryo Credit Information and SCI Information Service, you can compare the effects of market volatilities on Koryo Credit and SCI Information 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 Koryo Credit with a short position of SCI Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koryo Credit and SCI Information.

Diversification Opportunities for Koryo Credit and SCI Information

0.23

Correlation Coefficient

Koryo Credit  SCI Information

Modest diversification

The 3 months correlation between Koryo and SCI is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Koryo Credit Information and SCI Information Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCI Information Service and Koryo Credit 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 Koryo Credit Information are associated (or correlated) with SCI Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCI Information Service has no effect on the direction of Koryo Credit i.e., Koryo Credit and SCI Information go up and down completely randomly.

Pair Corralation between Koryo Credit and SCI Information

Assuming the 90 days trading horizon Koryo Credit is expected to generate 2.6 times less return on investment than SCI Information. But when comparing it to its historical volatility, Koryo Credit Information is 1.7 times less risky than SCI Information. It trades about 0.12 of its potential returns per unit of risk. SCI Information Service is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  204,500  in SCI Information Service on September 20, 2024 and sell it today you would earn a total of  13,500  from holding SCI Information Service or generate 6.6% return on investment over 90 days.

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

Koryo Credit Information  vs.  SCI Information Service

Koryo Credit Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Koryo Credit Information has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Koryo Credit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SCI Information Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCI Information Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Koryo Credit and SCI Information

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

The idea behind Koryo Credit Information and SCI Information Service 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.