Correlation Between SCOR PK and Impala Platinum

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

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

Diversification Opportunities for SCOR PK and Impala Platinum

-0.03

Correlation Coefficient

SCOR PK  Impala Platinum

Good diversification

The 3 months correlation between SCOR and Impala is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Impala Platinum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impala Platinum Holdings 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 Impala Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impala Platinum Holdings has no effect on the direction of SCOR PK i.e., SCOR PK and Impala Platinum go up and down completely randomly.

Pair Corralation between SCOR PK and Impala Platinum

Assuming the 90 days horizon SCOR PK is expected to generate 1.02 times more return on investment than Impala Platinum. However, SCOR PK is 1.02 times more volatile than Impala Platinum Holdings. It trades about 0.04 of its potential returns per unit of risk. Impala Platinum Holdings is currently generating about -0.04 per unit of risk. If you would invest  248.00  in SCOR PK on November 29, 2024 and sell it today you would earn a total of  13.00  from holding SCOR PK or generate 5.24% return on investment over 90 days.

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

SCOR PK  vs.  Impala Platinum Holdings

SCOR PK

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SCOR PK may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Impala Platinum Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Impala Platinum Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SCOR PK and Impala Platinum

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

The idea behind SCOR PK and Impala Platinum Holdings 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.