Correlation Between Scope Metals and Elbit Imaging

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

By analyzing existing cross correlation between Scope Metals Group and Elbit Imaging, you can compare the effects of market volatilities on Scope Metals and Elbit Imaging 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 Scope Metals with a short position of Elbit Imaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scope Metals and Elbit Imaging.

Diversification Opportunities for Scope Metals and Elbit Imaging

0.22

Correlation Coefficient

Scope Metals  Elbit Imaging

Modest diversification

The 3 months correlation between Scope and Elbit is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Scope Metals Group and Elbit Imaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Imaging and Scope Metals 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 Scope Metals Group are associated (or correlated) with Elbit Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Imaging has no effect on the direction of Scope Metals i.e., Scope Metals and Elbit Imaging go up and down completely randomly.

Pair Corralation between Scope Metals and Elbit Imaging

Assuming the 90 days trading horizon Scope Metals Group is expected to under-perform the Elbit Imaging. But the stock apears to be less risky and, when comparing its historical volatility, Scope Metals Group is 2.38 times less risky than Elbit Imaging. The stock trades about -0.06 of its potential returns per unit of risk. The Elbit Imaging is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  60,000  in Elbit Imaging on December 30, 2024 and sell it today you would earn a total of  14,000  from holding Elbit Imaging or generate 23.33% return on investment over 90 days.

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

Scope Metals Group  vs.  Elbit Imaging

Scope Metals Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Scope Metals Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Elbit Imaging

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elbit Imaging are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Elbit Imaging unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scope Metals and Elbit Imaging

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

The idea behind Scope Metals Group and Elbit Imaging 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.