Correlation Between SMA Solar and SCOTT TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both SMA Solar and SCOTT TECHNOLOGY 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 SMA Solar and SCOTT TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and SCOTT TECHNOLOGY, you can compare the effects of market volatilities on SMA Solar and SCOTT TECHNOLOGY 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 SMA Solar with a short position of SCOTT TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and SCOTT TECHNOLOGY.
Diversification Opportunities for SMA Solar and SCOTT TECHNOLOGY
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between SMA and SCOTT is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY and SMA Solar 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 SMA Solar Technology are associated (or correlated) with SCOTT TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOTT TECHNOLOGY has no effect on the direction of SMA Solar i.e., SMA Solar and SCOTT TECHNOLOGY go up and down completely randomly.
Pair Corralation between SMA Solar and SCOTT TECHNOLOGY
Assuming the 90 days horizon SMA Solar Technology is expected to under-perform the SCOTT TECHNOLOGY. In addition to that, SMA Solar is 1.37 times more volatile than SCOTT TECHNOLOGY. It trades about -0.2 of its total potential returns per unit of risk. SCOTT TECHNOLOGY is currently generating about 0.03 per unit of volatility. If you would invest 127.00 in SCOTT TECHNOLOGY on September 2, 2024 and sell it today you would earn a total of 9.00 from holding SCOTT TECHNOLOGY or generate 7.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. SCOTT TECHNOLOGY
Performance |
| Timeline |
| SMA Solar Technology |
| SCOTT TECHNOLOGY |
SMA Solar and SCOTT TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and SCOTT TECHNOLOGY
The main advantage of trading using opposite SMA Solar and SCOTT TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY will offset losses from the drop in SCOTT TECHNOLOGY's long position.| SMA Solar vs. Ming Le Sports | SMA Solar vs. Columbia Sportswear | SMA Solar vs. CVW CLEANTECH INC | SMA Solar vs. CHINA TONTINE WINES |
| SCOTT TECHNOLOGY vs. SIVERS SEMICONDUCTORS AB | SCOTT TECHNOLOGY vs. Darden Restaurants | SCOTT TECHNOLOGY vs. Reliance Steel Aluminum | SCOTT TECHNOLOGY vs. Q2M Managementberatung AG |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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