Correlation Between SCOR SE and HANNRUECKVSE ADR

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

By analyzing existing cross correlation between SCOR SE and HANNRUECKVSE ADR 12ON, you can compare the effects of market volatilities on SCOR SE and HANNRUECKVSE ADR 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 SE with a short position of HANNRUECKVSE ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR SE and HANNRUECKVSE ADR.

Diversification Opportunities for SCOR SE and HANNRUECKVSE ADR

0.09

Correlation Coefficient

SCOR SE  HANNRUECKVSE ADR

Significant diversification

The 3 months correlation between SCOR and HANNRUECKVSE is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding SCOR SE and HANNRUECKVSE ADR 12ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANNRUECKVSE ADR 12ON and SCOR SE 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 SE are associated (or correlated) with HANNRUECKVSE ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANNRUECKVSE ADR 12ON has no effect on the direction of SCOR SE i.e., SCOR SE and HANNRUECKVSE ADR go up and down completely randomly.

Pair Corralation between SCOR SE and HANNRUECKVSE ADR

Assuming the 90 days trading horizon SCOR SE is expected to generate 0.71 times more return on investment than HANNRUECKVSE ADR. However, SCOR SE is 1.4 times less risky than HANNRUECKVSE ADR. It trades about 0.03 of its potential returns per unit of risk. HANNRUECKVSE ADR 12ON is currently generating about -0.02 per unit of risk. If you would invest  2,075  in SCOR SE on October 12, 2024 and sell it today you would earn a total of  411.00  from holding SCOR SE or generate 19.81% return on investment over 90 days.

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

SCOR SE  vs.  HANNRUECKVSE ADR 12ON

SCOR SE

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR SE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SCOR SE reported solid returns over the last few months and may actually be approaching a breakup point.

HANNRUECKVSE ADR 12ON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HANNRUECKVSE ADR 12ON has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HANNRUECKVSE ADR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SCOR SE and HANNRUECKVSE ADR

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

The idea behind SCOR SE and HANNRUECKVSE ADR 12ON 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.