Correlation Between Bodycote PLC and SCOTT TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both Bodycote PLC 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 Bodycote PLC and SCOTT TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bodycote PLC and SCOTT TECHNOLOGY, you can compare the effects of market volatilities on Bodycote PLC 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 Bodycote PLC with a short position of SCOTT TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bodycote PLC and SCOTT TECHNOLOGY.
Diversification Opportunities for Bodycote PLC and SCOTT TECHNOLOGY
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bodycote and SCOTT is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bodycote PLC and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY and Bodycote PLC 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 Bodycote 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 Bodycote PLC i.e., Bodycote PLC and SCOTT TECHNOLOGY go up and down completely randomly.
Pair Corralation between Bodycote PLC and SCOTT TECHNOLOGY
Assuming the 90 days horizon Bodycote PLC is expected to under-perform the SCOTT TECHNOLOGY. In addition to that, Bodycote PLC is 1.45 times more volatile than SCOTT TECHNOLOGY. It trades about -0.08 of its total potential returns per unit of risk. SCOTT TECHNOLOGY is currently generating about 0.01 per unit of volatility. If you would invest 122.00 in SCOTT TECHNOLOGY on October 20, 2024 and sell it today you would earn a total of 0.00 from holding SCOTT TECHNOLOGY or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bodycote PLC vs. SCOTT TECHNOLOGY
Performance |
| Timeline |
| Bodycote PLC |
| SCOTT TECHNOLOGY |
Bodycote PLC and SCOTT TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bodycote PLC and SCOTT TECHNOLOGY
The main advantage of trading using opposite Bodycote PLC and SCOTT TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bodycote PLC 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.| Bodycote PLC vs. Ribbon Communications | Bodycote PLC vs. Entravision Communications | Bodycote PLC vs. FIH MOBILE | Bodycote PLC vs. Chengdu PUTIAN Telecommunications |
| SCOTT TECHNOLOGY vs. Magic Software Enterprises | SCOTT TECHNOLOGY vs. Constellation Software | SCOTT TECHNOLOGY vs. Take Two Interactive Software | SCOTT TECHNOLOGY vs. Guidewire Software |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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