Correlation Between Norofert and SCUT SA

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

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

Diversification Opportunities for Norofert and SCUT SA

-0.73

Correlation Coefficient

Norofert  SCUT SA

Pay attention - limited upside

The 3 months correlation between Norofert and SCUT is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Norofert SA and SCUT SA BACAU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCUT SA BACAU and Norofert 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 Norofert SA are associated (or correlated) with SCUT SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCUT SA BACAU has no effect on the direction of Norofert i.e., Norofert and SCUT SA go up and down completely randomly.

Pair Corralation between Norofert and SCUT SA

Assuming the 90 days trading horizon Norofert SA is expected to under-perform the SCUT SA. But the stock apears to be less risky and, when comparing its historical volatility, Norofert SA is 2.23 times less risky than SCUT SA. The stock trades about -0.33 of its potential returns per unit of risk. The SCUT SA BACAU is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,360  in SCUT SA BACAU on December 22, 2024 and sell it today you would earn a total of  880.00  from holding SCUT SA BACAU or generate 37.29% return on investment over 90 days.

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

Norofert SA  vs.  SCUT SA BACAU

Norofert SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Norofert SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

SCUT SA BACAU

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SCUT SA BACAU are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, SCUT SA displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Norofert and SCUT SA

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

The idea behind Norofert SA and SCUT SA BACAU 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 Stocks Directory module to find actively traded stocks across global markets.