Correlation Between SCUT SA and Palace SA

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

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

Diversification Opportunities for SCUT SA and Palace SA

0.0

Correlation Coefficient

SCUT SA  Palace SA

Pay attention - limited upside

The 3 months correlation between SCUT and Palace is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SCUT SA BACAU and Palace SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palace SA and SCUT SA 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 SCUT SA BACAU are associated (or correlated) with Palace SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palace SA has no effect on the direction of SCUT SA i.e., SCUT SA and Palace SA go up and down completely randomly.

Pair Corralation between SCUT SA and Palace SA

If you would invest  2,360  in SCUT SA BACAU on December 20, 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	Flat
Strength	Insignificant
Accuracy	1.82%
Values	Daily Returns

SCUT SA BACAU  vs.  Palace SA

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.

Palace SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Palace SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Palace SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SCUT SA and Palace SA

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

The idea behind SCUT SA BACAU and Palace SA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.