Correlation Between SCOR PK and Utilities Select

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

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

Diversification Opportunities for SCOR PK and Utilities Select

-0.17

Correlation Coefficient

SCOR PK  Utilities Select

Good diversification

The 3 months correlation between SCOR and Utilities is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Utilities Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Select Sector 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 Utilities Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Select Sector has no effect on the direction of SCOR PK i.e., SCOR PK and Utilities Select go up and down completely randomly.

Pair Corralation between SCOR PK and Utilities Select

Assuming the 90 days horizon SCOR PK is expected to generate 1.39 times less return on investment than Utilities Select. In addition to that, SCOR PK is 2.92 times more volatile than Utilities Select Sector. It trades about 0.05 of its total potential returns per unit of risk. Utilities Select Sector is currently generating about 0.22 per unit of volatility. If you would invest  7,606  in Utilities Select Sector on October 22, 2024 and sell it today you would earn a total of  278.00  from holding Utilities Select Sector or generate 3.66% 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.  Utilities Select Sector

SCOR PK

Risk-Adjusted Performance

7 of 100

OK

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.

Utilities Select Sector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Utilities Select Sector has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Utilities Select is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SCOR PK and Utilities Select

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

The idea behind SCOR PK and Utilities Select Sector 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..