Correlation Between Century Petroleum and SCOR PK

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

By analyzing existing cross correlation between Century Petroleum Corp and SCOR PK, you can compare the effects of market volatilities on Century Petroleum and SCOR PK 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 Century Petroleum with a short position of SCOR PK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Petroleum and SCOR PK.

Diversification Opportunities for Century Petroleum and SCOR PK

0.0

Correlation Coefficient

Century Petroleum  SCOR PK

Pay attention - limited upside

The 3 months correlation between Century and SCOR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Century Petroleum Corp and SCOR PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR PK and Century Petroleum 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 Century Petroleum Corp are associated (or correlated) with SCOR PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOR PK has no effect on the direction of Century Petroleum i.e., Century Petroleum and SCOR PK go up and down completely randomly.

Pair Corralation between Century Petroleum and SCOR PK

Given the investment horizon of 90 days Century Petroleum Corp is expected to generate 15.87 times more return on investment than SCOR PK. However, Century Petroleum is 15.87 times more volatile than SCOR PK. It trades about 0.04 of its potential returns per unit of risk. SCOR PK is currently generating about 0.04 per unit of risk. If you would invest  0.01  in Century Petroleum Corp on October 5, 2024 and sell it today you would lose (0.01) from holding Century Petroleum Corp or give up 90.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.34%
Values	Daily Returns

Century Petroleum Corp  vs.  SCOR PK

Century Petroleum Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Century Petroleum Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Century Petroleum is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

SCOR PK

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SCOR PK showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Century Petroleum and SCOR PK

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

The idea behind Century Petroleum Corp and SCOR PK 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.