Correlation Between SCOTT TECHNOLOGY and Aluminumof China
Can any of the company-specific risk be diversified away by investing in both SCOTT TECHNOLOGY and Aluminumof China 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 SCOTT TECHNOLOGY and Aluminumof China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOTT TECHNOLOGY and Aluminum of, you can compare the effects of market volatilities on SCOTT TECHNOLOGY and Aluminumof China 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 SCOTT TECHNOLOGY with a short position of Aluminumof China. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOTT TECHNOLOGY and Aluminumof China.
Diversification Opportunities for SCOTT TECHNOLOGY and Aluminumof China
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SCOTT and Aluminumof is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminumof China and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY are associated (or correlated) with Aluminumof China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminumof China has no effect on the direction of SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and Aluminumof China go up and down completely randomly.
Pair Corralation between SCOTT TECHNOLOGY and Aluminumof China
Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to under-perform the Aluminumof China. But the stock apears to be less risky and, when comparing its historical volatility, SCOTT TECHNOLOGY is 1.34 times less risky than Aluminumof China. The stock trades about -0.05 of its potential returns per unit of risk. The Aluminum of is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 55.00 in Aluminum of on November 7, 2024 and sell it today you would earn a total of 6.00 from holding Aluminum of or generate 10.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCOTT TECHNOLOGY vs. Aluminum of
Performance |
| Timeline |
| SCOTT TECHNOLOGY |
| Aluminumof China |
SCOTT TECHNOLOGY and Aluminumof China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOTT TECHNOLOGY and Aluminumof China
The main advantage of trading using opposite SCOTT TECHNOLOGY and Aluminumof China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOTT TECHNOLOGY position performs unexpectedly, Aluminumof China 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 Aluminumof China will offset losses from the drop in Aluminumof China's long position.| SCOTT TECHNOLOGY vs. MPH Health Care | SCOTT TECHNOLOGY vs. Garofalo Health Care | SCOTT TECHNOLOGY vs. US Physical Therapy | SCOTT TECHNOLOGY vs. Siemens Healthineers AG |
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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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