Correlation Between Scotts Miracle-Gro and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both Scotts Miracle-Gro and China BlueChemical 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 Scotts Miracle-Gro and China BlueChemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Scotts Miracle Gro and China BlueChemical, you can compare the effects of market volatilities on Scotts Miracle-Gro and China BlueChemical 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 Scotts Miracle-Gro with a short position of China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scotts Miracle-Gro and China BlueChemical.
Diversification Opportunities for Scotts Miracle-Gro and China BlueChemical
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scotts and China is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding The Scotts Miracle Gro and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical and Scotts Miracle-Gro 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 The Scotts Miracle Gro are associated (or correlated) with China BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of Scotts Miracle-Gro i.e., Scotts Miracle-Gro and China BlueChemical go up and down completely randomly.
Pair Corralation between Scotts Miracle-Gro and China BlueChemical
Assuming the 90 days trading horizon Scotts Miracle-Gro is expected to generate 1.45 times less return on investment than China BlueChemical. But when comparing it to its historical volatility, The Scotts Miracle Gro is 1.41 times less risky than China BlueChemical. It trades about 0.07 of its potential returns per unit of risk. China BlueChemical is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 21.00 in China BlueChemical on August 24, 2024 and sell it today you would earn a total of 2.00 from holding China BlueChemical or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.78% |
| Values | Daily Returns |
The Scotts Miracle Gro vs. China BlueChemical
Performance |
| Timeline |
| Scotts Miracle-Gro |
| China BlueChemical |
Scotts Miracle-Gro and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scotts Miracle-Gro and China BlueChemical
The main advantage of trading using opposite Scotts Miracle-Gro and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scotts Miracle-Gro position performs unexpectedly, China BlueChemical 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 BlueChemical will offset losses from the drop in China BlueChemical's long position.| Scotts Miracle-Gro vs. REVO INSURANCE SPA | Scotts Miracle-Gro vs. National Bank Holdings | Scotts Miracle-Gro vs. PT Bank Maybank | Scotts Miracle-Gro vs. Ameriprise Financial |
| China BlueChemical vs. Apollo Investment Corp | China BlueChemical vs. REGAL ASIAN INVESTMENTS | China BlueChemical vs. SEI INVESTMENTS | China BlueChemical vs. SHIN ETSU CHEMICAL |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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