Correlation Between Near and SCOM

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

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

Diversification Opportunities for Near and SCOM

0.0

Correlation Coefficient

Near  SCOM

Pay attention - limited upside

The 3 months correlation between Near and SCOM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Near and SCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOM and Near 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 Near are associated (or correlated) with SCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOM has no effect on the direction of Near i.e., Near and SCOM go up and down completely randomly.

Pair Corralation between Near and SCOM

If you would invest  110.00  in Near on January 30, 2024 and sell it today you would earn a total of  603.00  from holding Near or generate 548.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Near  vs.  SCOM

Near

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Near are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Near exhibited solid returns over the last few months and may actually be approaching a breakup point.

SCOM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCOM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, SCOM is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Near and SCOM

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

The idea behind Near and SCOM 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.