Correlation Between RTL GROUP and SCANDMEDICAL SOLDK

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

By analyzing existing cross correlation between RTL GROUP UNSPADR and SCANDMEDICAL SOLDK 040, you can compare the effects of market volatilities on RTL GROUP and SCANDMEDICAL SOLDK 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 RTL GROUP with a short position of SCANDMEDICAL SOLDK. Check out your portfolio center. Please also check ongoing floating volatility patterns of RTL GROUP and SCANDMEDICAL SOLDK.

Diversification Opportunities for RTL GROUP and SCANDMEDICAL SOLDK

0.17

Correlation Coefficient

RTL GROUP  SCANDMEDICAL SOLDK

Average diversification

The 3 months correlation between RTL and SCANDMEDICAL is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding RTL GROUP UNSPADR and SCANDMEDICAL SOLDK 040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANDMEDICAL SOLDK 040 and RTL GROUP 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 RTL GROUP UNSPADR are associated (or correlated) with SCANDMEDICAL SOLDK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCANDMEDICAL SOLDK 040 has no effect on the direction of RTL GROUP i.e., RTL GROUP and SCANDMEDICAL SOLDK go up and down completely randomly.

Pair Corralation between RTL GROUP and SCANDMEDICAL SOLDK

Assuming the 90 days trading horizon RTL GROUP UNSPADR is expected to under-perform the SCANDMEDICAL SOLDK. But the stock apears to be less risky and, when comparing its historical volatility, RTL GROUP UNSPADR is 3.15 times less risky than SCANDMEDICAL SOLDK. The stock trades about -0.01 of its potential returns per unit of risk. The SCANDMEDICAL SOLDK 040 is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  98.00  in SCANDMEDICAL SOLDK 040 on September 24, 2024 and sell it today you would lose (26.00) from holding SCANDMEDICAL SOLDK 040 or give up 26.53% of portfolio value over 90 days.

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

RTL GROUP UNSPADR  vs.  SCANDMEDICAL SOLDK 040

RTL GROUP UNSPADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RTL GROUP UNSPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SCANDMEDICAL SOLDK 040

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCANDMEDICAL SOLDK 040 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with RTL GROUP and SCANDMEDICAL SOLDK

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

The idea behind RTL GROUP UNSPADR and SCANDMEDICAL SOLDK 040 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.