Correlation Between SCOTT TECHNOLOGY and X FAB
Can any of the company-specific risk be diversified away by investing in both SCOTT TECHNOLOGY and X FAB 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 X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOTT TECHNOLOGY and X FAB Silicon Foundries, you can compare the effects of market volatilities on SCOTT TECHNOLOGY and X FAB 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 X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOTT TECHNOLOGY and X FAB.
Diversification Opportunities for SCOTT TECHNOLOGY and X FAB
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SCOTT and XFB is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and X FAB go up and down completely randomly.
Pair Corralation between SCOTT TECHNOLOGY and X FAB
Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to generate 1.28 times more return on investment than X FAB. However, SCOTT TECHNOLOGY is 1.28 times more volatile than X FAB Silicon Foundries. It trades about 0.01 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.02 per unit of risk. If you would invest 146.00 in SCOTT TECHNOLOGY on August 24, 2024 and sell it today you would lose (21.00) from holding SCOTT TECHNOLOGY or give up 14.38% 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. X FAB Silicon Foundries
Performance |
| Timeline |
| SCOTT TECHNOLOGY |
| X FAB Silicon |
SCOTT TECHNOLOGY and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOTT TECHNOLOGY and X FAB
The main advantage of trading using opposite SCOTT TECHNOLOGY and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOTT TECHNOLOGY position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB's long position.| SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc |
| X FAB vs. Boiron SA | X FAB vs. ON SEMICONDUCTOR | X FAB vs. Tianjin Capital Environmental | X FAB vs. Insteel Industries |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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