Correlation Between Scope Metals and Shufersal

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

Diversification Opportunities for Scope Metals and Shufersal

0.91

Correlation Coefficient

Scope Metals  Shufersal

Almost no diversification

The 3 months correlation between Scope and Shufersal is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Scope Metals Group and Shufersal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shufersal 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 Shufersal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shufersal has no effect on the direction of Scope Metals i.e., Scope Metals and Shufersal go up and down completely randomly.

Pair Corralation between Scope Metals and Shufersal

Assuming the 90 days trading horizon Scope Metals is expected to generate 2.52 times less return on investment than Shufersal. In addition to that, Scope Metals is 1.32 times more volatile than Shufersal. It trades about 0.15 of its total potential returns per unit of risk. Shufersal is currently generating about 0.5 per unit of volatility. If you would invest  346,700  in Shufersal on September 24, 2024 and sell it today you would earn a total of  45,400  from holding Shufersal or generate 13.09% 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.  Shufersal

Scope Metals Group

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Scope Metals Group are ranked lower than 24 (%) 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.

Shufersal

Risk-Adjusted Performance

24 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Shufersal are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Shufersal sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scope Metals and Shufersal

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

The idea behind Scope Metals Group and Shufersal 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.