Correlation Between SCOTT TECHNOLOGY and Sinopec Shanghai
Can any of the company-specific risk be diversified away by investing in both SCOTT TECHNOLOGY and Sinopec Shanghai 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 Sinopec Shanghai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOTT TECHNOLOGY and Sinopec Shanghai Petrochemical, you can compare the effects of market volatilities on SCOTT TECHNOLOGY and Sinopec Shanghai 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 Sinopec Shanghai. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOTT TECHNOLOGY and Sinopec Shanghai.
Diversification Opportunities for SCOTT TECHNOLOGY and Sinopec Shanghai
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SCOTT and Sinopec is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and Sinopec Shanghai Petrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopec Shanghai Pet 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 Sinopec Shanghai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopec Shanghai Pet has no effect on the direction of SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and Sinopec Shanghai go up and down completely randomly.
Pair Corralation between SCOTT TECHNOLOGY and Sinopec Shanghai
Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to under-perform the Sinopec Shanghai. But the stock apears to be less risky and, when comparing its historical volatility, SCOTT TECHNOLOGY is 2.98 times less risky than Sinopec Shanghai. The stock trades about -0.15 of its potential returns per unit of risk. The Sinopec Shanghai Petrochemical is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Sinopec Shanghai Petrochemical on October 13, 2024 and sell it today you would earn a total of 0.00 from holding Sinopec Shanghai Petrochemical or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
SCOTT TECHNOLOGY vs. Sinopec Shanghai Petrochemical
Performance |
| Timeline |
| SCOTT TECHNOLOGY |
| Sinopec Shanghai Pet |
SCOTT TECHNOLOGY and Sinopec Shanghai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOTT TECHNOLOGY and Sinopec Shanghai
The main advantage of trading using opposite SCOTT TECHNOLOGY and Sinopec Shanghai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOTT TECHNOLOGY position performs unexpectedly, Sinopec Shanghai 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 Sinopec Shanghai will offset losses from the drop in Sinopec Shanghai's long position.| SCOTT TECHNOLOGY vs. Gladstone Investment | SCOTT TECHNOLOGY vs. PURETECH HEALTH PLC | SCOTT TECHNOLOGY vs. Siemens Healthineers AG | SCOTT TECHNOLOGY vs. CARDINAL HEALTH |
| Sinopec Shanghai vs. Gol Intelligent Airlines | Sinopec Shanghai vs. Vishay Intertechnology | Sinopec Shanghai vs. UPDATE SOFTWARE | Sinopec Shanghai vs. SCOTT TECHNOLOGY |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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