Correlation Between SCOR PK and Midcap Fund

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

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

Diversification Opportunities for SCOR PK and Midcap Fund

-0.32

Correlation Coefficient

SCOR PK  Midcap Fund

Very good diversification

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

Pair Corralation between SCOR PK and Midcap Fund

Assuming the 90 days horizon SCOR PK is expected to generate 3.23 times more return on investment than Midcap Fund. However, SCOR PK is 3.23 times more volatile than Midcap Fund Class. It trades about 0.08 of its potential returns per unit of risk. Midcap Fund Class is currently generating about -0.05 per unit of risk. If you would invest  246.00  in SCOR PK on December 22, 2024 and sell it today you would earn a total of  32.00  from holding SCOR PK or generate 13.01% 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.  Midcap Fund Class

SCOR PK

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 6 (%) 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.

Midcap Fund Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Midcap Fund Class has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Midcap Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SCOR PK and Midcap Fund

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

The idea behind SCOR PK and Midcap Fund Class 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.