Correlation Between SCG Construction and Investment

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

By analyzing existing cross correlation between SCG Construction JSC and Investment And Construction, you can compare the effects of market volatilities on SCG Construction and Investment 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 SCG Construction with a short position of Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCG Construction and Investment.

Diversification Opportunities for SCG Construction and Investment

-0.09

Correlation Coefficient

SCG Construction  Investment

Good diversification

The 3 months correlation between SCG and Investment is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding SCG Construction JSC and Investment And Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment And Const and SCG Construction 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 SCG Construction JSC are associated (or correlated) with Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment And Const has no effect on the direction of SCG Construction i.e., SCG Construction and Investment go up and down completely randomly.

Pair Corralation between SCG Construction and Investment

Assuming the 90 days trading horizon SCG Construction JSC is expected to generate 0.64 times more return on investment than Investment. However, SCG Construction JSC is 1.55 times less risky than Investment. It trades about 0.15 of its potential returns per unit of risk. Investment And Construction is currently generating about -0.01 per unit of risk. If you would invest  6,520,000  in SCG Construction JSC on December 22, 2024 and sell it today you would earn a total of  1,180,000  from holding SCG Construction JSC or generate 18.1% return on investment over 90 days.

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

SCG Construction JSC  vs.  Investment And Construction

SCG Construction JSC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SCG Construction JSC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, SCG Construction displayed solid returns over the last few months and may actually be approaching a breakup point.

Investment And Const

Risk-Adjusted Performance

Very Weak

Over the last 90 days Investment And Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SCG Construction and Investment

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

The idea behind SCG Construction JSC and Investment And Construction 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.