Correlation Between TISCO Financial and SCB X

Can any of the company-specific risk be diversified away by investing in both TISCO Financial and SCB X 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 TISCO Financial and SCB X into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TISCO Financial Group and SCB X Public, you can compare the effects of market volatilities on TISCO Financial and SCB X 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 TISCO Financial with a short position of SCB X. Check out your portfolio center. Please also check ongoing floating volatility patterns of TISCO Financial and SCB X.

Diversification Opportunities for TISCO Financial and SCB X

0.61

Correlation Coefficient

TISCO Financial  SCB X

Poor diversification

The 3 months correlation between TISCO and SCB is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding TISCO Financial Group and SCB X Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCB X Public and TISCO Financial 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 TISCO Financial Group are associated (or correlated) with SCB X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCB X Public has no effect on the direction of TISCO Financial i.e., TISCO Financial and SCB X go up and down completely randomly.

Pair Corralation between TISCO Financial and SCB X

Assuming the 90 days trading horizon TISCO Financial is expected to generate 1.44 times less return on investment than SCB X. But when comparing it to its historical volatility, TISCO Financial Group is 1.87 times less risky than SCB X. It trades about 0.05 of its potential returns per unit of risk. SCB X Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,618  in SCB X Public on August 31, 2024 and sell it today you would earn a total of  1,782  from holding SCB X Public or generate 18.53% return on investment over 90 days.

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

TISCO Financial Group  vs.  SCB X Public

TISCO Financial Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TISCO Financial Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, TISCO Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SCB X Public

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCB X Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, SCB X may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with TISCO Financial and SCB X

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

The idea behind TISCO Financial Group and SCB X Public 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.