Correlation Between SCOTT TECHNOLOGY and First Quantum
Can any of the company-specific risk be diversified away by investing in both SCOTT TECHNOLOGY and First Quantum 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 First Quantum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOTT TECHNOLOGY and First Quantum Minerals, you can compare the effects of market volatilities on SCOTT TECHNOLOGY and First Quantum 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 First Quantum. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOTT TECHNOLOGY and First Quantum.
Diversification Opportunities for SCOTT TECHNOLOGY and First Quantum
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SCOTT and First is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and First Quantum Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Quantum Minerals 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 First Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Quantum Minerals has no effect on the direction of SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and First Quantum go up and down completely randomly.
Pair Corralation between SCOTT TECHNOLOGY and First Quantum
Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to generate 6.39 times less return on investment than First Quantum. But when comparing it to its historical volatility, SCOTT TECHNOLOGY is 1.16 times less risky than First Quantum. It trades about 0.01 of its potential returns per unit of risk. First Quantum Minerals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,112 in First Quantum Minerals on September 15, 2024 and sell it today you would earn a total of 184.00 from holding First Quantum Minerals or generate 16.55% 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. First Quantum Minerals
Performance |
| Timeline |
| SCOTT TECHNOLOGY |
| First Quantum Minerals |
SCOTT TECHNOLOGY and First Quantum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOTT TECHNOLOGY and First Quantum
The main advantage of trading using opposite SCOTT TECHNOLOGY and First Quantum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOTT TECHNOLOGY position performs unexpectedly, First Quantum 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 First Quantum will offset losses from the drop in First Quantum's long position.| SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc |
| First Quantum vs. Spirent Communications plc | First Quantum vs. SBA Communications Corp | First Quantum vs. Highlight Communications AG | First Quantum vs. Entravision Communications |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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