Correlation Between Standard Chemical and SCI Pharmtech
Can any of the company-specific risk be diversified away by investing in both Standard Chemical and SCI Pharmtech 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 Standard Chemical and SCI Pharmtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Chemical Pharmaceutical and SCI Pharmtech, you can compare the effects of market volatilities on Standard Chemical and SCI Pharmtech 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 Standard Chemical with a short position of SCI Pharmtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Chemical and SCI Pharmtech.
Diversification Opportunities for Standard Chemical and SCI Pharmtech
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Standard and SCI is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Standard Chemical Pharmaceutic and SCI Pharmtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCI Pharmtech and Standard Chemical 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 Standard Chemical Pharmaceutical are associated (or correlated) with SCI Pharmtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCI Pharmtech has no effect on the direction of Standard Chemical i.e., Standard Chemical and SCI Pharmtech go up and down completely randomly.
Pair Corralation between Standard Chemical and SCI Pharmtech
Assuming the 90 days trading horizon Standard Chemical is expected to generate 11.94 times less return on investment than SCI Pharmtech. But when comparing it to its historical volatility, Standard Chemical Pharmaceutical is 1.48 times less risky than SCI Pharmtech. It trades about 0.03 of its potential returns per unit of risk. SCI Pharmtech is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 8,960 in SCI Pharmtech on August 29, 2024 and sell it today you would earn a total of 590.00 from holding SCI Pharmtech or generate 6.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Standard Chemical Pharmaceutic vs. SCI Pharmtech
Performance |
| Timeline |
| Standard Chemical |
| SCI Pharmtech |
Standard Chemical and SCI Pharmtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Chemical and SCI Pharmtech
The main advantage of trading using opposite Standard Chemical and SCI Pharmtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Chemical position performs unexpectedly, SCI Pharmtech 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 SCI Pharmtech will offset losses from the drop in SCI Pharmtech's long position.| Standard Chemical vs. Sinphar Pharmaceutical Co | Standard Chemical vs. Grape King Bio | Standard Chemical vs. Apex Biotechnology Corp | Standard Chemical vs. Leatec Fine Ceramics |
| SCI Pharmtech vs. Grape King Bio | SCI Pharmtech vs. Standard Chemical Pharmaceutical | SCI Pharmtech vs. Adimmune Corp | SCI Pharmtech vs. ScinoPharm Taiwan |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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