Correlation Between SCOTT TECHNOLOGY and CDL INVESTMENT
Can any of the company-specific risk be diversified away by investing in both SCOTT TECHNOLOGY and CDL INVESTMENT 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 CDL INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOTT TECHNOLOGY and CDL INVESTMENT, you can compare the effects of market volatilities on SCOTT TECHNOLOGY and CDL INVESTMENT 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 CDL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOTT TECHNOLOGY and CDL INVESTMENT.
Diversification Opportunities for SCOTT TECHNOLOGY and CDL INVESTMENT
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SCOTT and CDL is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and CDL INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDL INVESTMENT 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 CDL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDL INVESTMENT has no effect on the direction of SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and CDL INVESTMENT go up and down completely randomly.
Pair Corralation between SCOTT TECHNOLOGY and CDL INVESTMENT
Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to generate 0.81 times more return on investment than CDL INVESTMENT. However, SCOTT TECHNOLOGY is 1.24 times less risky than CDL INVESTMENT. It trades about -0.09 of its potential returns per unit of risk. CDL INVESTMENT is currently generating about -0.13 per unit of risk. If you would invest 121.00 in SCOTT TECHNOLOGY on October 12, 2024 and sell it today you would lose (3.00) from holding SCOTT TECHNOLOGY or give up 2.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCOTT TECHNOLOGY vs. CDL INVESTMENT
Performance |
| Timeline |
| SCOTT TECHNOLOGY |
| CDL INVESTMENT |
SCOTT TECHNOLOGY and CDL INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOTT TECHNOLOGY and CDL INVESTMENT
The main advantage of trading using opposite SCOTT TECHNOLOGY and CDL INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOTT TECHNOLOGY position performs unexpectedly, CDL INVESTMENT 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 CDL INVESTMENT will offset losses from the drop in CDL INVESTMENT's long position.| SCOTT TECHNOLOGY vs. CITIC Telecom International | SCOTT TECHNOLOGY vs. ecotel communication ag | SCOTT TECHNOLOGY vs. Citic Telecom International | SCOTT TECHNOLOGY vs. Comba Telecom Systems |
| CDL INVESTMENT vs. H2O Retailing | CDL INVESTMENT vs. SCOTT TECHNOLOGY | CDL INVESTMENT vs. Fast Retailing Co | CDL INVESTMENT vs. SALESFORCE INC CDR |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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