Correlation Between Itay Financial and Scope Metals

Can any of the company-specific risk be diversified away by investing in both Itay Financial and Scope Metals 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 Itay Financial and Scope Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Itay Financial AA and Scope Metals Group, you can compare the effects of market volatilities on Itay Financial and Scope Metals 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 Itay Financial with a short position of Scope Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itay Financial and Scope Metals.

Diversification Opportunities for Itay Financial and Scope Metals

0.9

Correlation Coefficient

Itay Financial  Scope Metals

Almost no diversification

The 3 months correlation between Itay and Scope is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Itay Financial AA and Scope Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scope Metals Group and Itay Financial 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 Itay Financial AA are associated (or correlated) with Scope Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scope Metals Group has no effect on the direction of Itay Financial i.e., Itay Financial and Scope Metals go up and down completely randomly.

Pair Corralation between Itay Financial and Scope Metals

Assuming the 90 days trading horizon Itay Financial is expected to generate 1.3 times less return on investment than Scope Metals. In addition to that, Itay Financial is 1.68 times more volatile than Scope Metals Group. It trades about 0.03 of its total potential returns per unit of risk. Scope Metals Group is currently generating about 0.06 per unit of volatility. If you would invest  1,441,000  in Scope Metals Group on October 12, 2024 and sell it today you would earn a total of  23,000  from holding Scope Metals Group or generate 1.6% return on investment over 90 days.

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

Itay Financial AA  vs.  Scope Metals Group

Itay Financial AA

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Itay Financial AA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Itay Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Scope Metals Group

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Scope Metals Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Scope Metals sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Itay Financial and Scope Metals

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

The idea behind Itay Financial AA and Scope Metals Group 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.