Correlation Between SCB X and Filter Vision

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

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

Diversification Opportunities for SCB X and Filter Vision

-0.67

Correlation Coefficient

SCB X  Filter Vision

Excellent diversification

The 3 months correlation between SCB and Filter is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding SCB X Public and Filter Vision Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Filter Vision Public and SCB X 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 SCB X Public are associated (or correlated) with Filter Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Filter Vision Public has no effect on the direction of SCB X i.e., SCB X and Filter Vision go up and down completely randomly.

Pair Corralation between SCB X and Filter Vision

Assuming the 90 days trading horizon SCB X Public is expected to generate 0.24 times more return on investment than Filter Vision. However, SCB X Public is 4.1 times less risky than Filter Vision. It trades about 0.17 of its potential returns per unit of risk. Filter Vision Public is currently generating about -0.62 per unit of risk. If you would invest  11,450  in SCB X Public on September 28, 2024 and sell it today you would earn a total of  350.00  from holding SCB X Public or generate 3.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

SCB X Public  vs.  Filter Vision Public

SCB X Public

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SCB X Public are ranked lower than 11 (%) 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.

Filter Vision Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Filter Vision Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with SCB X and Filter Vision

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

The idea behind SCB X Public and Filter Vision 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.