Correlation Between Scope Metals and Kerur Holdings

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

By analyzing existing cross correlation between Scope Metals Group and Kerur Holdings, you can compare the effects of market volatilities on Scope Metals and Kerur Holdings 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 Scope Metals with a short position of Kerur Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scope Metals and Kerur Holdings.

Diversification Opportunities for Scope Metals and Kerur Holdings

0.9

Correlation Coefficient

Scope Metals  Kerur Holdings

Almost no diversification

The 3 months correlation between Scope and Kerur is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Scope Metals Group and Kerur Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kerur Holdings and Scope Metals 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 Scope Metals Group are associated (or correlated) with Kerur Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kerur Holdings has no effect on the direction of Scope Metals i.e., Scope Metals and Kerur Holdings go up and down completely randomly.

Pair Corralation between Scope Metals and Kerur Holdings

Assuming the 90 days trading horizon Scope Metals Group is expected to generate 1.2 times more return on investment than Kerur Holdings. However, Scope Metals is 1.2 times more volatile than Kerur Holdings. It trades about 0.33 of its potential returns per unit of risk. Kerur Holdings is currently generating about 0.18 per unit of risk. If you would invest  1,041,000  in Scope Metals Group on September 15, 2024 and sell it today you would earn a total of  416,000  from holding Scope Metals Group or generate 39.96% return on investment over 90 days.

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

Scope Metals Group  vs.  Kerur Holdings

Scope Metals Group

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Scope Metals Group are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Scope Metals sustained solid returns over the last few months and may actually be approaching a breakup point.

Kerur Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kerur Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kerur Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scope Metals and Kerur Holdings

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

The idea behind Scope Metals Group and Kerur Holdings 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.