Correlation Between PURETECH HEALTH and SCOTT TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both PURETECH HEALTH and SCOTT TECHNOLOGY 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 PURETECH HEALTH and SCOTT TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PURETECH HEALTH PLC and SCOTT TECHNOLOGY, you can compare the effects of market volatilities on PURETECH HEALTH and SCOTT TECHNOLOGY 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 PURETECH HEALTH with a short position of SCOTT TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of PURETECH HEALTH and SCOTT TECHNOLOGY.
Diversification Opportunities for PURETECH HEALTH and SCOTT TECHNOLOGY
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PURETECH and SCOTT is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding PURETECH HEALTH PLC and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY and PURETECH HEALTH 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 PURETECH HEALTH PLC are associated (or correlated) with SCOTT TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOTT TECHNOLOGY has no effect on the direction of PURETECH HEALTH i.e., PURETECH HEALTH and SCOTT TECHNOLOGY go up and down completely randomly.
Pair Corralation between PURETECH HEALTH and SCOTT TECHNOLOGY
Assuming the 90 days horizon PURETECH HEALTH PLC is expected to under-perform the SCOTT TECHNOLOGY. In addition to that, PURETECH HEALTH is 1.01 times more volatile than SCOTT TECHNOLOGY. It trades about -0.02 of its total potential returns per unit of risk. SCOTT TECHNOLOGY is currently generating about 0.0 per unit of volatility. If you would invest 153.00 in SCOTT TECHNOLOGY on October 13, 2024 and sell it today you would lose (34.00) from holding SCOTT TECHNOLOGY or give up 22.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PURETECH HEALTH PLC vs. SCOTT TECHNOLOGY
Performance |
| Timeline |
| PURETECH HEALTH PLC |
| SCOTT TECHNOLOGY |
PURETECH HEALTH and SCOTT TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PURETECH HEALTH and SCOTT TECHNOLOGY
The main advantage of trading using opposite PURETECH HEALTH and SCOTT TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PURETECH HEALTH position performs unexpectedly, SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY will offset losses from the drop in SCOTT TECHNOLOGY's long position.| PURETECH HEALTH vs. Apple Inc | PURETECH HEALTH vs. Apple Inc | PURETECH HEALTH vs. Apple Inc | PURETECH HEALTH vs. Apple Inc |
| SCOTT TECHNOLOGY vs. Gladstone Investment | SCOTT TECHNOLOGY vs. PURETECH HEALTH PLC | SCOTT TECHNOLOGY vs. Siemens Healthineers AG | SCOTT TECHNOLOGY vs. CARDINAL HEALTH |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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