Correlation Between Shemen Industries and Scope Metals

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

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

Diversification Opportunities for Shemen Industries and Scope Metals

0.87

Correlation Coefficient

Shemen Industries  Scope Metals

Very poor diversification

The 3 months correlation between Shemen and Scope is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Shemen Industries and Scope Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scope Metals Group and Shemen Industries 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 Shemen Industries are associated (or correlated) with Scope Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scope Metals Group has no effect on the direction of Shemen Industries i.e., Shemen Industries and Scope Metals go up and down completely randomly.

Pair Corralation between Shemen Industries and Scope Metals

Assuming the 90 days trading horizon Shemen Industries is expected to generate 5.09 times less return on investment than Scope Metals. In addition to that, Shemen Industries is 1.29 times more volatile than Scope Metals Group. It trades about 0.02 of its total potential returns per unit of risk. Scope Metals Group is currently generating about 0.14 per unit of volatility. If you would invest  1,077,000  in Scope Metals Group on September 29, 2024 and sell it today you would earn a total of  354,000  from holding Scope Metals Group or generate 32.87% return on investment over 90 days.

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

Shemen Industries  vs.  Scope Metals Group

Shemen Industries

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shemen Industries are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Shemen Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Scope Metals Group

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Scope Metals Group are ranked lower than 22 (%) 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.

Pair Trading with Shemen Industries and Scope Metals

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

The idea behind Shemen Industries and Scope Metals Group 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 CEOs Directory module to screen CEOs from public companies around the world.