Correlation Between SCOTT TECHNOLOGY and IND+COMMBK CHINA
Can any of the company-specific risk be diversified away by investing in both SCOTT TECHNOLOGY and IND+COMMBK 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 IND+COMMBK 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 INDCOMMBK CHINA ADR20, you can compare the effects of market volatilities on SCOTT TECHNOLOGY and IND+COMMBK 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 IND+COMMBK CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOTT TECHNOLOGY and IND+COMMBK CHINA.
Diversification Opportunities for SCOTT TECHNOLOGY and IND+COMMBK CHINA
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between SCOTT and IND+COMMBK is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and INDCOMMBK CHINA ADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDCOMMBK CHINA ADR20 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 IND+COMMBK CHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDCOMMBK CHINA ADR20 has no effect on the direction of SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and IND+COMMBK CHINA go up and down completely randomly.
Pair Corralation between SCOTT TECHNOLOGY and IND+COMMBK CHINA
Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to generate 0.91 times more return on investment than IND+COMMBK CHINA. However, SCOTT TECHNOLOGY is 1.1 times less risky than IND+COMMBK CHINA. It trades about 0.17 of its potential returns per unit of risk. INDCOMMBK CHINA ADR20 is currently generating about -0.06 per unit of risk. If you would invest 117.00 in SCOTT TECHNOLOGY on September 5, 2024 and sell it today you would earn a total of 12.00 from holding SCOTT TECHNOLOGY or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCOTT TECHNOLOGY vs. INDCOMMBK CHINA ADR20
Performance |
| Timeline |
| SCOTT TECHNOLOGY |
| INDCOMMBK CHINA ADR20 |
SCOTT TECHNOLOGY and IND+COMMBK CHINA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOTT TECHNOLOGY and IND+COMMBK CHINA
The main advantage of trading using opposite SCOTT TECHNOLOGY and IND+COMMBK CHINA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOTT TECHNOLOGY position performs unexpectedly, IND+COMMBK 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 IND+COMMBK CHINA will offset losses from the drop in IND+COMMBK CHINA's long position.| SCOTT TECHNOLOGY vs. SOFI TECHNOLOGIES | SCOTT TECHNOLOGY vs. Lion Biotechnologies | SCOTT TECHNOLOGY vs. TFS FINANCIAL | SCOTT TECHNOLOGY vs. QBE Insurance Group |
| IND+COMMBK CHINA vs. BOSTON BEER A | IND+COMMBK CHINA vs. Benchmark Electronics | IND+COMMBK CHINA vs. UMC Electronics Co | IND+COMMBK CHINA vs. LPKF Laser Electronics |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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