Correlation Between SCOR PK and Eton Pharmaceuticals

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

By analyzing existing cross correlation between SCOR PK and Eton Pharmaceuticals, you can compare the effects of market volatilities on SCOR PK and Eton Pharmaceuticals 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 Eton Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR PK and Eton Pharmaceuticals.

Diversification Opportunities for SCOR PK and Eton Pharmaceuticals

0.81

Correlation Coefficient

SCOR PK  Eton Pharmaceuticals

Very poor diversification

The 3 months correlation between SCOR and Eton is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Eton Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eton Pharmaceuticals 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 Eton Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eton Pharmaceuticals has no effect on the direction of SCOR PK i.e., SCOR PK and Eton Pharmaceuticals go up and down completely randomly.

Pair Corralation between SCOR PK and Eton Pharmaceuticals

Assuming the 90 days horizon SCOR PK is expected to under-perform the Eton Pharmaceuticals. But the pink sheet apears to be less risky and, when comparing its historical volatility, SCOR PK is 1.29 times less risky than Eton Pharmaceuticals. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Eton Pharmaceuticals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  519.00  in Eton Pharmaceuticals on October 4, 2024 and sell it today you would earn a total of  813.00  from holding Eton Pharmaceuticals or generate 156.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.09%
Values	Daily Returns

SCOR PK  vs.  Eton Pharmaceuticals

SCOR PK

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, SCOR PK may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Eton Pharmaceuticals

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eton Pharmaceuticals are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Eton Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SCOR PK and Eton Pharmaceuticals

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

The idea behind SCOR PK and Eton Pharmaceuticals 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.