Correlation Between Scottish American and Lendinvest PLC

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

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

Diversification Opportunities for Scottish American and Lendinvest PLC

0.52

Correlation Coefficient

Scottish American  Lendinvest PLC

Very weak diversification

The 3 months correlation between Scottish and Lendinvest is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Scottish American Investment and Lendinvest PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendinvest PLC and Scottish American 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 Scottish American Investment are associated (or correlated) with Lendinvest PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendinvest PLC has no effect on the direction of Scottish American i.e., Scottish American and Lendinvest PLC go up and down completely randomly.

Pair Corralation between Scottish American and Lendinvest PLC

Assuming the 90 days trading horizon Scottish American is expected to generate 8.64 times less return on investment than Lendinvest PLC. But when comparing it to its historical volatility, Scottish American Investment is 4.33 times less risky than Lendinvest PLC. It trades about 0.15 of its potential returns per unit of risk. Lendinvest PLC is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  2,700  in Lendinvest PLC on April 25, 2025 and sell it today you would earn a total of  1,650  from holding Lendinvest PLC or generate 61.11% return on investment over 90 days.

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

Scottish American Investment  vs.  Lendinvest PLC

Scottish American

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Scottish American Investment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Scottish American is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Lendinvest PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lendinvest PLC are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lendinvest PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scottish American and Lendinvest PLC

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

The idea behind Scottish American Investment and Lendinvest PLC 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.