Correlation Between SCOR PK and Forum Energy
Can any of the company-specific risk be diversified away by investing in both SCOR PK and Forum Energy 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 SCOR PK and Forum Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOR PK and Forum Energy Metals, you can compare the effects of market volatilities on SCOR PK and Forum Energy 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 SCOR PK with a short position of Forum Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR PK and Forum Energy.
Diversification Opportunities for SCOR PK and Forum Energy
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between SCOR and Forum is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Forum Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forum Energy Metals and SCOR PK 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 SCOR PK are associated (or correlated) with Forum Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forum Energy Metals has no effect on the direction of SCOR PK i.e., SCOR PK and Forum Energy go up and down completely randomly.
Pair Corralation between SCOR PK and Forum Energy
Assuming the 90 days horizon SCOR PK is expected to generate 0.4 times more return on investment than Forum Energy. However, SCOR PK is 2.47 times less risky than Forum Energy. It trades about -0.01 of its potential returns per unit of risk. Forum Energy Metals is currently generating about -0.01 per unit of risk. If you would invest 278.00 in SCOR PK on September 5, 2024 and sell it today you would lose (30.00) from holding SCOR PK or give up 10.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
SCOR PK vs. Forum Energy Metals
Performance |
| Timeline |
| SCOR PK |
| Forum Energy Metals |
SCOR PK and Forum Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOR PK and Forum Energy
The main advantage of trading using opposite SCOR PK and Forum Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOR PK position performs unexpectedly, Forum Energy 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 Forum Energy will offset losses from the drop in Forum Energy's long position.The idea behind SCOR PK and Forum Energy Metals 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.| Forum Energy vs. Seadrill Limited | Forum Energy vs. Noble plc | Forum Energy vs. Borr Drilling | Forum Energy vs. SCOR PK |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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