Correlation Between SCOR PK and Plains GP

Can any of the company-specific risk be diversified away by investing in both SCOR PK and Plains GP 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 SCOR PK and Plains GP into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for SCOR PK and Plains GP

0.47

Correlation Coefficient

SCOR PK  Plains GP

Very weak diversification

The 3 months correlation between SCOR and Plains is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Plains GP Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plains GP Holdings and SCOR PK 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 SCOR PK are associated (or correlated) with Plains GP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plains GP Holdings has no effect on the direction of SCOR PK i.e., SCOR PK and Plains GP go up and down completely randomly.

Pair Corralation between SCOR PK and Plains GP

Assuming the 90 days horizon SCOR PK is expected to generate 2.17 times more return on investment than Plains GP. However, SCOR PK is 2.17 times more volatile than Plains GP Holdings. It trades about 0.11 of its potential returns per unit of risk. Plains GP Holdings is currently generating about 0.1 per unit of risk. If you would invest  209.00  in SCOR PK on September 3, 2024 and sell it today you would earn a total of  39.00  from holding SCOR PK or generate 18.66% return on investment over 90 days.

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

SCOR PK  vs.  Plains GP Holdings

SCOR PK

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SCOR PK showed solid returns over the last few months and may actually be approaching a breakup point.

Plains GP Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Plains GP Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal technical and fundamental indicators, Plains GP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SCOR PK and Plains GP

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

The idea behind SCOR PK and Plains GP 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.