Correlation Between Electronic Control and Scientific Industries
Can any of the company-specific risk be diversified away by investing in both Electronic Control and Scientific Industries 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 Electronic Control and Scientific Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Control Security and Scientific Industries, you can compare the effects of market volatilities on Electronic Control and Scientific Industries 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 Electronic Control with a short position of Scientific Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Control and Scientific Industries.
Diversification Opportunities for Electronic Control and Scientific Industries
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Electronic and Scientific is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Control Security and Scientific Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientific Industries and Electronic Control 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 Electronic Control Security are associated (or correlated) with Scientific Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientific Industries has no effect on the direction of Electronic Control i.e., Electronic Control and Scientific Industries go up and down completely randomly.
Pair Corralation between Electronic Control and Scientific Industries
Given the investment horizon of 90 days Electronic Control Security is expected to generate 19.88 times more return on investment than Scientific Industries. However, Electronic Control is 19.88 times more volatile than Scientific Industries. It trades about 0.15 of its potential returns per unit of risk. Scientific Industries is currently generating about -0.01 per unit of risk. If you would invest 0.31 in Electronic Control Security on November 9, 2024 and sell it today you would lose (0.23) from holding Electronic Control Security or give up 74.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 59.55% |
| Values | Daily Returns |
Electronic Control Security vs. Scientific Industries
Performance |
| Timeline |
| Electronic Control |
| Scientific Industries |
Electronic Control and Scientific Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Control and Scientific Industries
The main advantage of trading using opposite Electronic Control and Scientific Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Control position performs unexpectedly, Scientific Industries 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 Scientific Industries will offset losses from the drop in Scientific Industries' long position.| Electronic Control vs. Guardforce AI Co | Electronic Control vs. Iveda Solutions | Electronic Control vs. Bridger Aerospace Group | Electronic Control vs. Supercom |
| Scientific Industries vs. Solitron Devices | Scientific Industries vs. Ieh Corp | Scientific Industries vs. SCI Engineered Materials | Scientific Industries vs. Surge Components |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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