Correlation Between SPACE and Scorpio Tankers
Can any of the company-specific risk be diversified away by investing in both SPACE 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 SPACE and Scorpio Tankers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPACE and Scorpio Tankers, you can compare the effects of market volatilities on SPACE 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 SPACE with a short position of Scorpio Tankers. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPACE and Scorpio Tankers.
Diversification Opportunities for SPACE and Scorpio Tankers
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SPACE and Scorpio is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and Scorpio Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scorpio Tankers and SPACE 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 SPACE 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 SPACE i.e., SPACE and Scorpio Tankers go up and down completely randomly.
Pair Corralation between SPACE and Scorpio Tankers
Assuming the 90 days horizon SPACE is expected to generate 3.41 times more return on investment than Scorpio Tankers. However, SPACE is 3.41 times more volatile than Scorpio Tankers. It trades about 0.08 of its potential returns per unit of risk. Scorpio Tankers is currently generating about -0.43 per unit of risk. If you would invest 42.00 in SPACE on August 24, 2024 and sell it today you would earn a total of 3.00 from holding SPACE or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPACE vs. Scorpio Tankers
Performance |
| Timeline |
| SPACE |
| Scorpio Tankers |
SPACE and Scorpio Tankers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPACE and Scorpio Tankers
The main advantage of trading using opposite SPACE and Scorpio Tankers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE 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 SPACE 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.| Scorpio Tankers vs. DHT Holdings | Scorpio Tankers vs. Teekay | Scorpio Tankers vs. HUMANA INC | Scorpio Tankers vs. Aquagold International |
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 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.
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