Correlation Between SCOTT TECHNOLOGY and CHINA HUARONG
Can any of the company-specific risk be diversified away by investing in both SCOTT TECHNOLOGY and CHINA HUARONG 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 CHINA HUARONG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOTT TECHNOLOGY and CHINA HUARONG ENERHD 50, you can compare the effects of market volatilities on SCOTT TECHNOLOGY and CHINA HUARONG 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 CHINA HUARONG. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOTT TECHNOLOGY and CHINA HUARONG.
Diversification Opportunities for SCOTT TECHNOLOGY and CHINA HUARONG
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SCOTT and CHINA is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and CHINA HUARONG ENERHD 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA HUARONG ENERHD 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 CHINA HUARONG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA HUARONG ENERHD has no effect on the direction of SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and CHINA HUARONG go up and down completely randomly.
Pair Corralation between SCOTT TECHNOLOGY and CHINA HUARONG
Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to generate 2.09 times less return on investment than CHINA HUARONG. But when comparing it to its historical volatility, SCOTT TECHNOLOGY is 5.79 times less risky than CHINA HUARONG. It trades about 0.2 of its potential returns per unit of risk. CHINA HUARONG ENERHD 50 is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.15 in CHINA HUARONG ENERHD 50 on September 20, 2024 and sell it today you would earn a total of 0.00 from holding CHINA HUARONG ENERHD 50 or generate 0.0% 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. CHINA HUARONG ENERHD 50
Performance |
| Timeline |
| SCOTT TECHNOLOGY |
| CHINA HUARONG ENERHD |
SCOTT TECHNOLOGY and CHINA HUARONG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOTT TECHNOLOGY and CHINA HUARONG
The main advantage of trading using opposite SCOTT TECHNOLOGY and CHINA HUARONG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOTT TECHNOLOGY position performs unexpectedly, CHINA HUARONG 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 CHINA HUARONG will offset losses from the drop in CHINA HUARONG's long position.| SCOTT TECHNOLOGY vs. USWE SPORTS AB | SCOTT TECHNOLOGY vs. Playa Hotels Resorts | SCOTT TECHNOLOGY vs. Haverty Furniture Companies | SCOTT TECHNOLOGY vs. PLAYTIKA HOLDING DL 01 |
| CHINA HUARONG vs. Micron Technology | CHINA HUARONG vs. SCOTT TECHNOLOGY | CHINA HUARONG vs. VARIOUS EATERIES LS | CHINA HUARONG vs. MACOM Technology Solutions |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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