Correlation Between Hotai and SCI Pharmtech
Can any of the company-specific risk be diversified away by investing in both Hotai 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 Hotai and SCI Pharmtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hotai Motor Co and SCI Pharmtech, you can compare the effects of market volatilities on Hotai 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 Hotai with a short position of SCI Pharmtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotai and SCI Pharmtech.
Diversification Opportunities for Hotai and SCI Pharmtech
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hotai and SCI is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hotai Motor Co and SCI Pharmtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCI Pharmtech and Hotai 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 Hotai Motor Co 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 Hotai i.e., Hotai and SCI Pharmtech go up and down completely randomly.
Pair Corralation between Hotai and SCI Pharmtech
Assuming the 90 days trading horizon Hotai Motor Co is expected to under-perform the SCI Pharmtech. In addition to that, Hotai is 1.21 times more volatile than SCI Pharmtech. It trades about -0.12 of its total potential returns per unit of risk. SCI Pharmtech is currently generating about 0.28 per unit of volatility. If you would invest 9,000 in SCI Pharmtech on September 2, 2024 and sell it today you would earn a total of 620.00 from holding SCI Pharmtech or generate 6.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hotai Motor Co vs. SCI Pharmtech
Performance |
| Timeline |
| Hotai Motor |
| SCI Pharmtech |
Hotai and SCI Pharmtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotai and SCI Pharmtech
The main advantage of trading using opposite Hotai and SCI Pharmtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotai 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.| Hotai vs. President Chain Store | Hotai vs. Formosa Petrochemical Corp | Hotai vs. Cheng Shin Rubber | Hotai vs. Formosa Chemicals Fibre |
| SCI Pharmtech vs. Taiwan Semiconductor Manufacturing | SCI Pharmtech vs. Hon Hai Precision | SCI Pharmtech vs. MediaTek | SCI Pharmtech vs. Chunghwa Telecom Co |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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