Correlation Between SCUT SA and TRANSILVANIA INVESTMENTS

Can any of the company-specific risk be diversified away by investing in both SCUT SA and TRANSILVANIA INVESTMENTS 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 TRANSILVANIA INVESTMENTS 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 TRANSILVANIA INVESTMENTS ALLIANCE, you can compare the effects of market volatilities on SCUT SA and TRANSILVANIA INVESTMENTS 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 TRANSILVANIA INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCUT SA and TRANSILVANIA INVESTMENTS.

Diversification Opportunities for SCUT SA and TRANSILVANIA INVESTMENTS

0.13

Correlation Coefficient

SCUT SA  TRANSILVANIA INVESTMENTS

Average diversification

The 3 months correlation between SCUT and TRANSILVANIA is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding SCUT SA BACAU and TRANSILVANIA INVESTMENTS ALLIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRANSILVANIA INVESTMENTS 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 TRANSILVANIA INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRANSILVANIA INVESTMENTS has no effect on the direction of SCUT SA i.e., SCUT SA and TRANSILVANIA INVESTMENTS go up and down completely randomly.

Pair Corralation between SCUT SA and TRANSILVANIA INVESTMENTS

Assuming the 90 days trading horizon SCUT SA is expected to generate 1.77 times less return on investment than TRANSILVANIA INVESTMENTS. But when comparing it to its historical volatility, SCUT SA BACAU is 1.07 times less risky than TRANSILVANIA INVESTMENTS. It trades about 0.04 of its potential returns per unit of risk. TRANSILVANIA INVESTMENTS ALLIANCE is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  33.00  in TRANSILVANIA INVESTMENTS ALLIANCE on September 13, 2024 and sell it today you would earn a total of  5.00  from holding TRANSILVANIA INVESTMENTS ALLIANCE or generate 15.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.33%
Values	Daily Returns

SCUT SA BACAU  vs.  TRANSILVANIA INVESTMENTS ALLIA

SCUT SA BACAU

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCUT SA BACAU are ranked lower than 10 (%) 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.

TRANSILVANIA INVESTMENTS

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with SCUT SA and TRANSILVANIA INVESTMENTS

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

The idea behind SCUT SA BACAU and TRANSILVANIA INVESTMENTS ALLIANCE 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.