Correlation Between SCOR PK and Paladin Energy

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

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

Diversification Opportunities for SCOR PK and Paladin Energy

-0.32

Correlation Coefficient

SCOR PK  Paladin Energy

Very good diversification

The 3 months correlation between SCOR and Paladin is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Paladin Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paladin Energy 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 Paladin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paladin Energy has no effect on the direction of SCOR PK i.e., SCOR PK and Paladin Energy go up and down completely randomly.

Pair Corralation between SCOR PK and Paladin Energy

Assuming the 90 days horizon SCOR PK is expected to generate 37.05 times less return on investment than Paladin Energy. But when comparing it to its historical volatility, SCOR PK is 18.02 times less risky than Paladin Energy. It trades about 0.03 of its potential returns per unit of risk. Paladin Energy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  466.00  in Paladin Energy on September 3, 2024 and sell it today you would earn a total of  38.00  from holding Paladin Energy or generate 8.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.39%
Values	Daily Returns

SCOR PK  vs.  Paladin Energy

SCOR PK

Risk-Adjusted Performance

8 of 100

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.

Paladin Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paladin Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting 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 Paladin Energy

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

The idea behind SCOR PK and Paladin Energy 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 Transaction History module to view history of all your transactions and understand their impact on performance.