Correlation Between Scpharmaceuticals and LIFE Old

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

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

Diversification Opportunities for Scpharmaceuticals and LIFE Old

0.24

Correlation Coefficient

Scpharmaceuticals  LIFE Old

Modest diversification

The 3 months correlation between Scpharmaceuticals and LIFE is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Scpharmaceuticals and LIFE Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFE Old and Scpharmaceuticals 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 Scpharmaceuticals are associated (or correlated) with LIFE Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFE Old has no effect on the direction of Scpharmaceuticals i.e., Scpharmaceuticals and LIFE Old go up and down completely randomly.

Pair Corralation between Scpharmaceuticals and LIFE Old

Given the investment horizon of 90 days Scpharmaceuticals is expected to generate 0.65 times more return on investment than LIFE Old. However, Scpharmaceuticals is 1.55 times less risky than LIFE Old. It trades about -0.01 of its potential returns per unit of risk. LIFE Old is currently generating about -0.04 per unit of risk. If you would invest  614.00  in Scpharmaceuticals on October 10, 2024 and sell it today you would lose (258.00) from holding Scpharmaceuticals or give up 42.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	70.77%
Values	Daily Returns

Scpharmaceuticals  vs.  LIFE Old

Scpharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scpharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

LIFE Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LIFE Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, LIFE Old is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Scpharmaceuticals and LIFE Old

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

The idea behind Scpharmaceuticals and LIFE Old 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.