Correlation Between SCI Pharmtech and Hotai
Can any of the company-specific risk be diversified away by investing in both SCI Pharmtech and Hotai 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 SCI Pharmtech and Hotai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCI Pharmtech and Hotai Motor Co, you can compare the effects of market volatilities on SCI Pharmtech and Hotai 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 SCI Pharmtech with a short position of Hotai. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCI Pharmtech and Hotai.
Diversification Opportunities for SCI Pharmtech and Hotai
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between SCI and Hotai is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding SCI Pharmtech and Hotai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotai Motor and SCI Pharmtech 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 SCI Pharmtech are associated (or correlated) with Hotai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotai Motor has no effect on the direction of SCI Pharmtech i.e., SCI Pharmtech and Hotai go up and down completely randomly.
Pair Corralation between SCI Pharmtech and Hotai
Assuming the 90 days trading horizon SCI Pharmtech is expected to generate 0.83 times more return on investment than Hotai. However, SCI Pharmtech is 1.21 times less risky than Hotai. It trades about 0.28 of its potential returns per unit of risk. Hotai Motor Co is currently generating about -0.12 per unit of risk. 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 |
SCI Pharmtech vs. Hotai Motor Co
Performance |
| Timeline |
| SCI Pharmtech |
| Hotai Motor |
SCI Pharmtech and Hotai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCI Pharmtech and Hotai
The main advantage of trading using opposite SCI Pharmtech and Hotai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCI Pharmtech position performs unexpectedly, Hotai 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 Hotai will offset losses from the drop in Hotai's long position.| SCI Pharmtech vs. Taiwan Semiconductor Manufacturing | SCI Pharmtech vs. Hon Hai Precision | SCI Pharmtech vs. MediaTek | SCI Pharmtech vs. Chunghwa Telecom Co |
| Hotai vs. President Chain Store | Hotai vs. Formosa Petrochemical Corp | Hotai vs. Cheng Shin Rubber | Hotai vs. Formosa Chemicals Fibre |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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