Correlation Between SCB X and Lalin Property

Can any of the company-specific risk be diversified away by investing in both SCB X and Lalin Property 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 Lalin Property 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 Lalin Property Public, you can compare the effects of market volatilities on SCB X and Lalin Property 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 Lalin Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCB X and Lalin Property.

Diversification Opportunities for SCB X and Lalin Property

-0.1

Correlation Coefficient

SCB X  Lalin Property

Good diversification

The 3 months correlation between SCB and Lalin is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding SCB X Public and Lalin Property Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lalin Property 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 Lalin Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lalin Property Public has no effect on the direction of SCB X i.e., SCB X and Lalin Property go up and down completely randomly.

Pair Corralation between SCB X and Lalin Property

Assuming the 90 days trading horizon SCB X Public is expected to generate 1.54 times more return on investment than Lalin Property. However, SCB X is 1.54 times more volatile than Lalin Property Public. It trades about 0.06 of its potential returns per unit of risk. Lalin Property Public is currently generating about -0.06 per unit of risk. If you would invest  8,732  in SCB X Public on September 4, 2024 and sell it today you would earn a total of  2,818  from holding SCB X Public or generate 32.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

SCB X Public  vs.  Lalin Property 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 conflicting fundamental drivers, SCB X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Lalin Property Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lalin Property Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Lalin Property is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SCB X and Lalin Property

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

The idea behind SCB X Public and Lalin Property 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 Transaction History module to view history of all your transactions and understand their impact on performance.