Correlation Between MUENCHRUECKUNSADR and SCOR SE

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

By analyzing existing cross correlation between MUENCHRUECKUNSADR 110 and SCOR SE, you can compare the effects of market volatilities on MUENCHRUECKUNSADR and SCOR SE 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 MUENCHRUECKUNSADR with a short position of SCOR SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of MUENCHRUECKUNSADR and SCOR SE.

Diversification Opportunities for MUENCHRUECKUNSADR and SCOR SE

0.49

Correlation Coefficient

MUENCHRUECKUNSADR  SCOR SE

Very weak diversification

The 3 months correlation between MUENCHRUECKUNSADR and SCOR is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding MUENCHRUECKUNSADR 110 and SCOR SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR SE and MUENCHRUECKUNSADR 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 MUENCHRUECKUNSADR 110 are associated (or correlated) with SCOR SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOR SE has no effect on the direction of MUENCHRUECKUNSADR i.e., MUENCHRUECKUNSADR and SCOR SE go up and down completely randomly.

Pair Corralation between MUENCHRUECKUNSADR and SCOR SE

Assuming the 90 days trading horizon MUENCHRUECKUNSADR 110 is expected to generate 0.8 times more return on investment than SCOR SE. However, MUENCHRUECKUNSADR 110 is 1.26 times less risky than SCOR SE. It trades about 0.09 of its potential returns per unit of risk. SCOR SE is currently generating about 0.03 per unit of risk. If you would invest  502.00  in MUENCHRUECKUNSADR 110 on October 12, 2024 and sell it today you would earn a total of  528.00  from holding MUENCHRUECKUNSADR 110 or generate 105.18% return on investment over 90 days.

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

MUENCHRUECKUNSADR 110  vs.  SCOR SE

MUENCHRUECKUNSADR 110

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MUENCHRUECKUNSADR 110 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, MUENCHRUECKUNSADR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

SCOR SE

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR SE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SCOR SE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MUENCHRUECKUNSADR and SCOR SE

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

The idea behind MUENCHRUECKUNSADR 110 and SCOR SE 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.

Check out your portfolio center.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.