Correlation Between SCI Information and System
Can any of the company-specific risk be diversified away by investing in both SCI Information and System 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 System 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 System and Application, you can compare the effects of market volatilities on SCI Information and System 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 System. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCI Information and System.
Diversification Opportunities for SCI Information and System
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SCI and System is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SCI Information Service and System and Application in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on System and Application 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 System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of System and Application has no effect on the direction of SCI Information i.e., SCI Information and System go up and down completely randomly.
Pair Corralation between SCI Information and System
Assuming the 90 days trading horizon SCI Information Service is expected to under-perform the System. But the stock apears to be less risky and, when comparing its historical volatility, SCI Information Service is 1.19 times less risky than System. The stock trades about -0.21 of its potential returns per unit of risk. The System and Application is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 141,900 in System and Application on August 28, 2024 and sell it today you would earn a total of 8,000 from holding System and Application or generate 5.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCI Information Service vs. System and Application
Performance |
| Timeline |
| SCI Information Service |
| System and Application |
SCI Information and System Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCI Information and System
The main advantage of trading using opposite SCI Information and System positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCI Information position performs unexpectedly, System 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 System will offset losses from the drop in System's long position.| SCI Information vs. Korea New Network | SCI Information vs. Dong A Eltek | SCI Information vs. Dreamus Company | SCI Information vs. SK Bioscience Co |
| System vs. Lake Materials Co | System vs. Top Material Co | System vs. TOPMATERIAL LTD | System vs. Lotte Data Communication |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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