Correlation Between Scope Metals and Gencell

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

Diversification Opportunities for Scope Metals and Gencell

0.27

Correlation Coefficient

Scope Metals  Gencell

Modest diversification

The 3 months correlation between Scope and Gencell is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Scope Metals Group and Gencell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gencell 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 Gencell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gencell has no effect on the direction of Scope Metals i.e., Scope Metals and Gencell go up and down completely randomly.

Pair Corralation between Scope Metals and Gencell

Assuming the 90 days trading horizon Scope Metals Group is expected to generate 0.4 times more return on investment than Gencell. However, Scope Metals Group is 2.5 times less risky than Gencell. It trades about -0.06 of its potential returns per unit of risk. Gencell is currently generating about -0.18 per unit of risk. If you would invest  1,402,000  in Scope Metals Group on December 30, 2024 and sell it today you would lose (96,000) from holding Scope Metals Group or give up 6.85% of portfolio value over 90 days.

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

Scope Metals Group  vs.  Gencell

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.

Gencell

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gencell has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Scope Metals and Gencell

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

The idea behind Scope Metals Group and Gencell 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 Valuation module to check real value of public entities based on technical and fundamental data.