Correlation Between SCOR PK and Global Lights
Can any of the company-specific risk be diversified away by investing in both SCOR PK and Global Lights 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 Global Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOR PK and Global Lights Acquisition, you can compare the effects of market volatilities on SCOR PK and Global Lights 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 Global Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR PK and Global Lights.
Diversification Opportunities for SCOR PK and Global Lights
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SCOR and Global is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Global Lights Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Lights Acquisition 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 Global Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Lights Acquisition has no effect on the direction of SCOR PK i.e., SCOR PK and Global Lights go up and down completely randomly.
Pair Corralation between SCOR PK and Global Lights
Assuming the 90 days horizon SCOR PK is expected to generate 18.63 times more return on investment than Global Lights. However, SCOR PK is 18.63 times more volatile than Global Lights Acquisition. It trades about 0.03 of its potential returns per unit of risk. Global Lights Acquisition is currently generating about 0.14 per unit of risk. If you would invest 197.00 in SCOR PK on September 4, 2024 and sell it today you would earn a total of 51.00 from holding SCOR PK or generate 25.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 51.12% |
| Values | Daily Returns |
SCOR PK vs. Global Lights Acquisition
Performance |
| Timeline |
| SCOR PK |
| Global Lights Acquisition |
SCOR PK and Global Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOR PK and Global Lights
The main advantage of trading using opposite SCOR PK and Global Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOR PK position performs unexpectedly, Global Lights 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 Global Lights will offset losses from the drop in Global Lights' long position.The idea behind SCOR PK and Global Lights Acquisition 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.| Global Lights vs. Visa Class A | Global Lights vs. Diamond Hill Investment | Global Lights vs. Distoken Acquisition | Global Lights vs. Associated Capital Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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