Correlation Between Kerur Holdings and Scope Metals

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

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

Diversification Opportunities for Kerur Holdings and Scope Metals

0.77

Correlation Coefficient

Kerur Holdings  Scope Metals

Poor diversification

The 3 months correlation between Kerur and Scope is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Kerur Holdings 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 Kerur Holdings 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 Kerur Holdings 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 Kerur Holdings i.e., Kerur Holdings and Scope Metals go up and down completely randomly.

Pair Corralation between Kerur Holdings and Scope Metals

Assuming the 90 days trading horizon Kerur Holdings is expected to under-perform the Scope Metals. But the stock apears to be less risky and, when comparing its historical volatility, Kerur Holdings is 1.08 times less risky than Scope Metals. The stock trades about -0.07 of its potential returns per unit of risk. The Scope Metals Group is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,402,000  in Scope Metals Group on December 30, 2024 and sell it today you would lose (96,000) from holding Scope Metals Group or give up 6.85% of portfolio value over 90 days.

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

Kerur Holdings  vs.  Scope Metals Group

Kerur Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kerur Holdings 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.

Scope Metals Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Scope Metals Group 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 Kerur Holdings and Scope Metals

The main advantage of trading using opposite Kerur Holdings and Scope Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kerur Holdings 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 Kerur Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.