Correlation Between Rojana Industrial and SCB X

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

By analyzing existing cross correlation between Rojana Industrial Park and SCB X Public, you can compare the effects of market volatilities on Rojana Industrial and SCB X 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 Rojana Industrial with a short position of SCB X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rojana Industrial and SCB X.

Diversification Opportunities for Rojana Industrial and SCB X

0.53

Correlation Coefficient

Rojana Industrial  SCB X

Very weak diversification

The 3 months correlation between Rojana and SCB is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Rojana Industrial Park and SCB X Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCB X Public and Rojana Industrial 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 Rojana Industrial Park are associated (or correlated) with SCB X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCB X Public has no effect on the direction of Rojana Industrial i.e., Rojana Industrial and SCB X go up and down completely randomly.

Pair Corralation between Rojana Industrial and SCB X

Assuming the 90 days trading horizon Rojana Industrial Park is expected to generate 2.13 times more return on investment than SCB X. However, Rojana Industrial is 2.13 times more volatile than SCB X Public. It trades about 0.07 of its potential returns per unit of risk. SCB X Public is currently generating about 0.13 per unit of risk. If you would invest  575.00  in Rojana Industrial Park on September 2, 2024 and sell it today you would earn a total of  55.00  from holding Rojana Industrial Park or generate 9.57% return on investment over 90 days.

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

Rojana Industrial Park  vs.  SCB X Public

Rojana Industrial Park

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rojana Industrial Park are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Rojana Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SCB X Public

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCB X Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, SCB X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Rojana Industrial and SCB X

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

The idea behind Rojana Industrial Park and SCB X Public 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.