Correlation Between Scandium Canada and Pollard Banknote

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

By analyzing existing cross correlation between Scandium Canada and Pollard Banknote Limited, you can compare the effects of market volatilities on Scandium Canada and Pollard Banknote 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 Scandium Canada with a short position of Pollard Banknote. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandium Canada and Pollard Banknote.

Diversification Opportunities for Scandium Canada and Pollard Banknote

-0.38

Correlation Coefficient

Scandium Canada  Pollard Banknote

Very good diversification

The 3 months correlation between Scandium and Pollard is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Scandium Canada and Pollard Banknote Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pollard Banknote and Scandium Canada 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 Scandium Canada are associated (or correlated) with Pollard Banknote. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pollard Banknote has no effect on the direction of Scandium Canada i.e., Scandium Canada and Pollard Banknote go up and down completely randomly.

Pair Corralation between Scandium Canada and Pollard Banknote

Assuming the 90 days horizon Scandium Canada is expected to generate 6.23 times more return on investment than Pollard Banknote. However, Scandium Canada is 6.23 times more volatile than Pollard Banknote Limited. It trades about 0.03 of its potential returns per unit of risk. Pollard Banknote Limited is currently generating about 0.02 per unit of risk. If you would invest  3.00  in Scandium Canada on September 1, 2024 and sell it today you would lose (1.00) from holding Scandium Canada or give up 33.33% of portfolio value over 90 days.

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

Scandium Canada  vs.  Pollard Banknote Limited

Scandium Canada

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Scandium Canada are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Scandium Canada showed solid returns over the last few months and may actually be approaching a breakup point.

Pollard Banknote

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pollard Banknote Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Pollard Banknote is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Scandium Canada and Pollard Banknote

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

The idea behind Scandium Canada and Pollard Banknote Limited 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.