Correlation Between SCI Information and KCI
Can any of the company-specific risk be diversified away by investing in both SCI Information and KCI 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 SCI Information and KCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCI Information Service and KCI Limited, you can compare the effects of market volatilities on SCI Information and KCI 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 SCI Information with a short position of KCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCI Information and KCI.
Diversification Opportunities for SCI Information and KCI
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SCI and KCI is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding SCI Information Service and KCI Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCI Limited and SCI Information 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 SCI Information Service are associated (or correlated) with KCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCI Limited has no effect on the direction of SCI Information i.e., SCI Information and KCI go up and down completely randomly.
Pair Corralation between SCI Information and KCI
Assuming the 90 days trading horizon SCI Information Service is expected to under-perform the KCI. In addition to that, SCI Information is 1.24 times more volatile than KCI Limited. It trades about -0.26 of its total potential returns per unit of risk. KCI Limited is currently generating about -0.26 per unit of volatility. If you would invest 739,000 in KCI Limited on September 4, 2024 and sell it today you would lose (71,000) from holding KCI Limited or give up 9.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCI Information Service vs. KCI Limited
Performance |
| Timeline |
| SCI Information Service |
| KCI Limited |
SCI Information and KCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCI Information and KCI
The main advantage of trading using opposite SCI Information and KCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCI Information position performs unexpectedly, KCI 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 KCI will offset losses from the drop in KCI's long position.| SCI Information vs. Dongjin Semichem Co | SCI Information vs. AhnLab Inc | SCI Information vs. Posco ICT | SCI Information vs. CJ ENM |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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