Correlation Between Focus Graphite and SCOR PK

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

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

Diversification Opportunities for Focus Graphite and SCOR PK

-0.22

Correlation Coefficient

Focus Graphite  SCOR PK

Very good diversification

The 3 months correlation between Focus and SCOR is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and SCOR PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR PK and Focus Graphite 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 Focus Graphite 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 Focus Graphite i.e., Focus Graphite and SCOR PK go up and down completely randomly.

Pair Corralation between Focus Graphite and SCOR PK

Assuming the 90 days horizon Focus Graphite is expected to under-perform the SCOR PK. In addition to that, Focus Graphite is 2.51 times more volatile than SCOR PK. It trades about -0.01 of its total potential returns per unit of risk. SCOR PK is currently generating about 0.02 per unit of volatility. If you would invest  218.00  in SCOR PK on October 21, 2024 and sell it today you would earn a total of  33.00  from holding SCOR PK or generate 15.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Focus Graphite  vs.  SCOR PK

Focus Graphite

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Focus Graphite are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Focus Graphite reported solid returns over the last few months and may actually be approaching a breakup point.

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 Focus Graphite and SCOR PK

The main advantage of trading using opposite Focus Graphite and SCOR PK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Graphite 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 Focus Graphite 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.