Correlation Between SCIENCE IN and ABERFORTH SMCOS

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

By analyzing existing cross correlation between SCIENCE IN SPORT and ABERFORTH SMCOS TRLS 01, you can compare the effects of market volatilities on SCIENCE IN and ABERFORTH SMCOS 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 SCIENCE IN with a short position of ABERFORTH SMCOS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCIENCE IN and ABERFORTH SMCOS.

Diversification Opportunities for SCIENCE IN and ABERFORTH SMCOS

-0.17

Correlation Coefficient

SCIENCE IN  ABERFORTH SMCOS

Good diversification

The 3 months correlation between SCIENCE and ABERFORTH is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding SCIENCE IN SPORT and ABERFORTH SMCOS TRLS 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABERFORTH SMCOS TRLS and SCIENCE IN 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 SCIENCE IN SPORT are associated (or correlated) with ABERFORTH SMCOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABERFORTH SMCOS TRLS has no effect on the direction of SCIENCE IN i.e., SCIENCE IN and ABERFORTH SMCOS go up and down completely randomly.

Pair Corralation between SCIENCE IN and ABERFORTH SMCOS

Assuming the 90 days horizon SCIENCE IN SPORT is expected to under-perform the ABERFORTH SMCOS. In addition to that, SCIENCE IN is 1.87 times more volatile than ABERFORTH SMCOS TRLS 01. It trades about -0.02 of its total potential returns per unit of risk. ABERFORTH SMCOS TRLS 01 is currently generating about -0.03 per unit of volatility. If you would invest  1,676  in ABERFORTH SMCOS TRLS 01 on December 23, 2024 and sell it today you would lose (56.00) from holding ABERFORTH SMCOS TRLS 01 or give up 3.34% of portfolio value over 90 days.

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

SCIENCE IN SPORT  vs.  ABERFORTH SMCOS TRLS 01

SCIENCE IN SPORT

Risk-Adjusted Performance

Very Weak

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

ABERFORTH SMCOS TRLS

Risk-Adjusted Performance

Very Weak

Over the last 90 days ABERFORTH SMCOS TRLS 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ABERFORTH SMCOS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SCIENCE IN and ABERFORTH SMCOS

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

The idea behind SCIENCE IN SPORT and ABERFORTH SMCOS TRLS 01 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.