Correlation Between SCOR PK and ProStar Holdings

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

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

Diversification Opportunities for SCOR PK and ProStar Holdings

-0.71

Correlation Coefficient

SCOR PK  ProStar Holdings

Pay attention - limited upside

The 3 months correlation between SCOR and ProStar is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and ProStar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProStar 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 ProStar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProStar Holdings has no effect on the direction of SCOR PK i.e., SCOR PK and ProStar Holdings go up and down completely randomly.

Pair Corralation between SCOR PK and ProStar Holdings

Assuming the 90 days horizon SCOR PK is expected to generate 2.35 times less return on investment than ProStar Holdings. But when comparing it to its historical volatility, SCOR PK is 2.53 times less risky than ProStar Holdings. It trades about 0.02 of its potential returns per unit of risk. ProStar Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  16.00  in ProStar Holdings on October 5, 2024 and sell it today you would lose (6.46) from holding ProStar Holdings or give up 40.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.99%
Values	Daily Returns

SCOR PK  vs.  ProStar Holdings

SCOR PK

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 7 (%) 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.

ProStar Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProStar Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ProStar Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SCOR PK and ProStar Holdings

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

The idea behind SCOR PK and ProStar 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 Anywhere module to track or share privately all of your investments from the convenience of any device.