Correlation Between SCOR PK and Gmo Emerging

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

By analyzing existing cross correlation between SCOR PK and Gmo Emerging Markets, you can compare the effects of market volatilities on SCOR PK and Gmo Emerging 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 Gmo Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR PK and Gmo Emerging.

Diversification Opportunities for SCOR PK and Gmo Emerging

-0.03

Correlation Coefficient

SCOR PK  Gmo Emerging

Good diversification

The 3 months correlation between SCOR and Gmo is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Gmo Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Emerging Markets 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 Gmo Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Emerging Markets has no effect on the direction of SCOR PK i.e., SCOR PK and Gmo Emerging go up and down completely randomly.

Pair Corralation between SCOR PK and Gmo Emerging

Assuming the 90 days horizon SCOR PK is expected to under-perform the Gmo Emerging. In addition to that, SCOR PK is 2.87 times more volatile than Gmo Emerging Markets. It trades about -0.18 of its total potential returns per unit of risk. Gmo Emerging Markets is currently generating about 0.09 per unit of volatility. If you would invest  1,426  in Gmo Emerging Markets on March 31, 2024 and sell it today you would earn a total of  21.00  from holding Gmo Emerging Markets or generate 1.47% return on investment over 90 days.

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

SCOR PK  vs.  Gmo Emerging Markets

SCOR PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCOR PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Gmo Emerging Markets

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Emerging Markets are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gmo Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SCOR PK and Gmo Emerging

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

The idea behind SCOR PK and Gmo Emerging Markets 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.