Correlation Between SCOR PK and PHI
Can any of the company-specific risk be diversified away by investing in both SCOR PK and PHI 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 PHI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOR PK and PHI Group, you can compare the effects of market volatilities on SCOR PK and PHI 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 PHI. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR PK and PHI.
Diversification Opportunities for SCOR PK and PHI
Very good diversification
The 3 months correlation between SCOR and PHI is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and PHI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHI Group 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 PHI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHI Group has no effect on the direction of SCOR PK i.e., SCOR PK and PHI go up and down completely randomly.
Pair Corralation between SCOR PK and PHI
Assuming the 90 days horizon SCOR PK is expected to generate 14.91 times less return on investment than PHI. But when comparing it to its historical volatility, SCOR PK is 19.61 times less risky than PHI. It trades about 0.3 of its potential returns per unit of risk. PHI Group is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 0.02 in PHI Group on September 1, 2024 and sell it today you would earn a total of 0.00 from holding PHI Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCOR PK vs. PHI Group
Performance |
| Timeline |
| SCOR PK |
| PHI Group |
SCOR PK and PHI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOR PK and PHI
The main advantage of trading using opposite SCOR PK and PHI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOR PK position performs unexpectedly, PHI 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 PHI will offset losses from the drop in PHI's long position.The idea behind SCOR PK and PHI Group 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.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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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