Correlation Between SCB X and Mida Leasing

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Can any of the company-specific risk be diversified away by investing in both SCB X and Mida Leasing 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 SCB X and Mida Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCB X Public and Mida Leasing Public, you can compare the effects of market volatilities on SCB X and Mida Leasing 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 SCB X with a short position of Mida Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCB X and Mida Leasing.

Diversification Opportunities for SCB X and Mida Leasing

-0.69
  Correlation Coefficient

Excellent diversification

The 3 months correlation between SCB and Mida is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding SCB X Public and Mida Leasing Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mida Leasing Public and SCB X 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 SCB X Public are associated (or correlated) with Mida Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mida Leasing Public has no effect on the direction of SCB X i.e., SCB X and Mida Leasing go up and down completely randomly.

Pair Corralation between SCB X and Mida Leasing

Assuming the 90 days trading horizon SCB X is expected to generate 20.11 times less return on investment than Mida Leasing. But when comparing it to its historical volatility, SCB X Public is 42.05 times less risky than Mida Leasing. It trades about 0.08 of its potential returns per unit of risk. Mida Leasing Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  117.00  in Mida Leasing Public on November 2, 2024 and sell it today you would lose (68.00) from holding Mida Leasing Public or give up 58.12% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy99.58%
ValuesDaily Returns

SCB X Public  vs.  Mida Leasing Public

 Performance 
       Timeline  
SCB X Public 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in SCB X Public are ranked lower than 16 (%) 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 March 2025.
Mida Leasing Public 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mida Leasing Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

SCB X and Mida Leasing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SCB X and Mida Leasing

The main advantage of trading using opposite SCB X and Mida Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCB X position performs unexpectedly, Mida Leasing 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 Mida Leasing will offset losses from the drop in Mida Leasing's long position.
The idea behind SCB X Public and Mida Leasing 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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