Correlation Between Land and SCB X

Can any of the company-specific risk be diversified away by investing in both Land and SCB X 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 Land and SCB X into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Land and Houses and SCB X Public, you can compare the effects of market volatilities on Land and SCB X 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 Land with a short position of SCB X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Land and SCB X.

Diversification Opportunities for Land and SCB X

-0.33

Correlation Coefficient

Land  SCB X

Very good diversification

The 3 months correlation between Land and SCB is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Land and Houses and SCB X Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCB X Public and Land 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 Land and Houses are associated (or correlated) with SCB X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCB X Public has no effect on the direction of Land i.e., Land and SCB X go up and down completely randomly.

Pair Corralation between Land and SCB X

Assuming the 90 days horizon Land and Houses is expected to under-perform the SCB X. In addition to that, Land is 1.69 times more volatile than SCB X Public. It trades about 0.0 of its total potential returns per unit of risk. SCB X Public is currently generating about 0.12 per unit of volatility. If you would invest  10,549  in SCB X Public on September 3, 2024 and sell it today you would earn a total of  901.00  from holding SCB X Public or generate 8.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Land and Houses  vs.  SCB X Public

Land and Houses

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Land and Houses has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Land is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

SCB X Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCB X Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, SCB X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Land and SCB X

The main advantage of trading using opposite Land and SCB X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Land position performs unexpectedly, SCB X 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 SCB X will offset losses from the drop in SCB X's long position.

The idea behind Land and Houses and SCB X 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.