Correlation Between SCOR PK and Horizon Space

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

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

Diversification Opportunities for SCOR PK and Horizon Space

-0.13

Correlation Coefficient

SCOR PK  Horizon Space

Good diversification

The 3 months correlation between SCOR and Horizon is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Horizon Space Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Space Acquisition 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 Horizon Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Space Acquisition has no effect on the direction of SCOR PK i.e., SCOR PK and Horizon Space go up and down completely randomly.

Pair Corralation between SCOR PK and Horizon Space

Assuming the 90 days horizon SCOR PK is expected to generate 15.32 times less return on investment than Horizon Space. But when comparing it to its historical volatility, SCOR PK is 9.81 times less risky than Horizon Space. It trades about 0.11 of its potential returns per unit of risk. Horizon Space Acquisition is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1.50  in Horizon Space Acquisition on December 28, 2024 and sell it today you would earn a total of  0.30  from holding Horizon Space Acquisition or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.82%
Values	Daily Returns

SCOR PK  vs.  Horizon Space Acquisition

SCOR PK

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 8 (%) 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.

Horizon Space Acquisition

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Space Acquisition are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Horizon Space showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SCOR PK and Horizon Space

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

The idea behind SCOR PK and Horizon Space Acquisition 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.

Check out your portfolio center.

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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.