Correlation Between KAUFMAN ET and SCOTT TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both KAUFMAN ET 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 KAUFMAN ET and SCOTT TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAUFMAN ET BROAD and SCOTT TECHNOLOGY, you can compare the effects of market volatilities on KAUFMAN ET 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 KAUFMAN ET with a short position of SCOTT TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAUFMAN ET and SCOTT TECHNOLOGY.
Diversification Opportunities for KAUFMAN ET and SCOTT TECHNOLOGY
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KAUFMAN and SCOTT is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding KAUFMAN ET BROAD and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY and KAUFMAN ET 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 KAUFMAN ET BROAD 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 KAUFMAN ET i.e., KAUFMAN ET and SCOTT TECHNOLOGY go up and down completely randomly.
Pair Corralation between KAUFMAN ET and SCOTT TECHNOLOGY
Assuming the 90 days trading horizon KAUFMAN ET BROAD is expected to generate 0.62 times more return on investment than SCOTT TECHNOLOGY. However, KAUFMAN ET BROAD is 1.62 times less risky than SCOTT TECHNOLOGY. It trades about 0.04 of its potential returns per unit of risk. SCOTT TECHNOLOGY is currently generating about 0.01 per unit of risk. If you would invest 2,360 in KAUFMAN ET BROAD on September 1, 2024 and sell it today you would earn a total of 740.00 from holding KAUFMAN ET BROAD or generate 31.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAUFMAN ET BROAD vs. SCOTT TECHNOLOGY
Performance |
| Timeline |
| KAUFMAN ET BROAD |
| SCOTT TECHNOLOGY |
KAUFMAN ET and SCOTT TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAUFMAN ET and SCOTT TECHNOLOGY
The main advantage of trading using opposite KAUFMAN ET and SCOTT TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAUFMAN ET 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.| KAUFMAN ET vs. SIVERS SEMICONDUCTORS AB | KAUFMAN ET vs. Darden Restaurants | KAUFMAN ET vs. Reliance Steel Aluminum | KAUFMAN ET vs. Q2M Managementberatung AG |
| SCOTT TECHNOLOGY vs. SIVERS SEMICONDUCTORS AB | SCOTT TECHNOLOGY vs. Darden Restaurants | SCOTT TECHNOLOGY vs. Reliance Steel Aluminum | SCOTT TECHNOLOGY vs. Q2M Managementberatung AG |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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