Correlation Between Inrom Construction and Scope Metals
Can any of the company-specific risk be diversified away by investing in both Inrom Construction and Scope Metals 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 Inrom Construction and Scope Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inrom Construction Industries and Scope Metals Group, you can compare the effects of market volatilities on Inrom Construction and Scope Metals 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 Inrom Construction with a short position of Scope Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inrom Construction and Scope Metals.
Diversification Opportunities for Inrom Construction and Scope Metals
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Inrom and Scope is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Inrom Construction Industries and Scope Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scope Metals Group and Inrom Construction 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 Inrom Construction Industries are associated (or correlated) with Scope Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scope Metals Group has no effect on the direction of Inrom Construction i.e., Inrom Construction and Scope Metals go up and down completely randomly.
Pair Corralation between Inrom Construction and Scope Metals
Assuming the 90 days trading horizon Inrom Construction is expected to generate 1.05 times less return on investment than Scope Metals. But when comparing it to its historical volatility, Inrom Construction Industries is 1.19 times less risky than Scope Metals. It trades about 0.4 of its potential returns per unit of risk. Scope Metals Group is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,160,000 in Scope Metals Group on September 1, 2024 and sell it today you would earn a total of 217,000 from holding Scope Metals Group or generate 18.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inrom Construction Industries vs. Scope Metals Group
Performance |
| Timeline |
| Inrom Construction |
| Scope Metals Group |
Inrom Construction and Scope Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inrom Construction and Scope Metals
The main advantage of trading using opposite Inrom Construction and Scope Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inrom Construction position performs unexpectedly, Scope Metals 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 Scope Metals will offset losses from the drop in Scope Metals' long position.| Inrom Construction vs. Arad | Inrom Construction vs. Alony Hetz Properties | Inrom Construction vs. Airport City | Inrom Construction vs. Harel Insurance Investments |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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