Correlation Between Southern California and Scorpio Tankers

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Southern California and Scorpio Tankers 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 Southern California and Scorpio Tankers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern California Gas and Scorpio Tankers, you can compare the effects of market volatilities on Southern California and Scorpio Tankers 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 Southern California with a short position of Scorpio Tankers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern California and Scorpio Tankers.

Diversification Opportunities for Southern California and Scorpio Tankers

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Southern and Scorpio is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Southern California Gas and Scorpio Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scorpio Tankers and Southern California 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 Southern California Gas are associated (or correlated) with Scorpio Tankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scorpio Tankers has no effect on the direction of Southern California i.e., Southern California and Scorpio Tankers go up and down completely randomly.

Pair Corralation between Southern California and Scorpio Tankers

Assuming the 90 days horizon Southern California Gas is expected to generate 1.72 times more return on investment than Scorpio Tankers. However, Southern California is 1.72 times more volatile than Scorpio Tankers. It trades about 0.03 of its potential returns per unit of risk. Scorpio Tankers is currently generating about 0.02 per unit of risk. If you would invest  2,350  in Southern California Gas on October 10, 2024 and sell it today you would earn a total of  292.00  from holding Southern California Gas or generate 12.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy89.52%
ValuesDaily Returns

Southern California Gas  vs.  Scorpio Tankers

 Performance 
       Timeline  
Southern California Gas 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Southern California Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Southern California is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.
Scorpio Tankers 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Scorpio Tankers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Southern California and Scorpio Tankers Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Southern California and Scorpio Tankers

The main advantage of trading using opposite Southern California and Scorpio Tankers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern California position performs unexpectedly, Scorpio Tankers 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 Scorpio Tankers will offset losses from the drop in Scorpio Tankers' long position.
The idea behind Southern California Gas and Scorpio Tankers 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.
Check out your portfolio center.
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

Other Complementary Tools

Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
Fundamental Analysis
View fundamental data based on most recent published financial statements
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Volatility Analysis
Get historical volatility and risk analysis based on latest market data