Correlation Between IDI Insurance and Scope Metals

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

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

Diversification Opportunities for IDI Insurance and Scope Metals

0.8

Correlation Coefficient

IDI Insurance  Scope Metals

Very poor diversification

The 3 months correlation between IDI and Scope is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding IDI Insurance 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 IDI Insurance 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 IDI Insurance 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 IDI Insurance i.e., IDI Insurance and Scope Metals go up and down completely randomly.

Pair Corralation between IDI Insurance and Scope Metals

Assuming the 90 days trading horizon IDI Insurance is expected to generate 1.19 times more return on investment than Scope Metals. However, IDI Insurance is 1.19 times more volatile than Scope Metals Group. It trades about 0.17 of its potential returns per unit of risk. Scope Metals Group is currently generating about 0.15 per unit of risk. If you would invest  1,488,440  in IDI Insurance on April 23, 2025 and sell it today you would earn a total of  491,560  from holding IDI Insurance or generate 33.03% return on investment over 90 days.

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

IDI Insurance  vs.  Scope Metals Group

IDI Insurance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IDI Insurance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IDI Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Scope Metals Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Scope Metals Group are ranked lower than 23 (%) 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 IDI Insurance and Scope Metals

The main advantage of trading using opposite IDI Insurance and Scope Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDI Insurance 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 IDI Insurance 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.

Check out your portfolio center.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..