Correlation Between SCOTT TECHNOLOGY and Power Assets
Can any of the company-specific risk be diversified away by investing in both SCOTT TECHNOLOGY and Power Assets 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 Power Assets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOTT TECHNOLOGY and Power Assets Holdings, you can compare the effects of market volatilities on SCOTT TECHNOLOGY and Power Assets 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 Power Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOTT TECHNOLOGY and Power Assets.
Diversification Opportunities for SCOTT TECHNOLOGY and Power Assets
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SCOTT and Power is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and Power Assets Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Assets Holdings 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 Power Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Assets Holdings has no effect on the direction of SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and Power Assets go up and down completely randomly.
Pair Corralation between SCOTT TECHNOLOGY and Power Assets
Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to generate 1.85 times more return on investment than Power Assets. However, SCOTT TECHNOLOGY is 1.85 times more volatile than Power Assets Holdings. It trades about 0.05 of its potential returns per unit of risk. Power Assets Holdings is currently generating about -0.26 per unit of risk. If you would invest 120.00 in SCOTT TECHNOLOGY on October 27, 2024 and sell it today you would earn a total of 2.00 from holding SCOTT TECHNOLOGY or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
SCOTT TECHNOLOGY vs. Power Assets Holdings
Performance |
| Timeline |
| SCOTT TECHNOLOGY |
| Power Assets Holdings |
SCOTT TECHNOLOGY and Power Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOTT TECHNOLOGY and Power Assets
The main advantage of trading using opposite SCOTT TECHNOLOGY and Power Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOTT TECHNOLOGY position performs unexpectedly, Power Assets 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 Power Assets will offset losses from the drop in Power Assets' long position.| SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc |
| Power Assets vs. PURETECH HEALTH PLC | Power Assets vs. ARDAGH METAL PACDL 0001 | Power Assets vs. De Grey Mining | Power Assets vs. WESANA HEALTH HOLD |
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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