Correlation Between SCOR PK and Small Pany

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

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

Diversification Opportunities for SCOR PK and Small Pany

0.69

Correlation Coefficient

SCOR PK  Small Pany

Poor diversification

The 3 months correlation between SCOR and Small is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Small Pany Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pany Value and SCOR PK 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 SCOR PK are associated (or correlated) with Small Pany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pany Value has no effect on the direction of SCOR PK i.e., SCOR PK and Small Pany go up and down completely randomly.

Pair Corralation between SCOR PK and Small Pany

Assuming the 90 days horizon SCOR PK is expected to generate 2.01 times more return on investment than Small Pany. However, SCOR PK is 2.01 times more volatile than Small Pany Value. It trades about 0.12 of its potential returns per unit of risk. Small Pany Value is currently generating about 0.14 per unit of risk. If you would invest  216.00  in SCOR PK on September 12, 2024 and sell it today you would earn a total of  43.00  from holding SCOR PK or generate 19.91% return on investment over 90 days.

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

SCOR PK  vs.  Small Pany Value

SCOR PK

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SCOR PK showed solid returns over the last few months and may actually be approaching a breakup point.

Small Pany Value

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Small Pany Value are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Small Pany may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SCOR PK and Small Pany

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

The idea behind SCOR PK and Small Pany Value 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.