Correlation Between Southern and Science Applications
Can any of the company-specific risk be diversified away by investing in both Southern and Science Applications 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 Southern and Science Applications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Southern and Science Applications International, you can compare the effects of market volatilities on Southern and Science Applications 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 Southern with a short position of Science Applications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern and Science Applications.
Diversification Opportunities for Southern and Science Applications
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Southern and Science is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding The Southern and Science Applications Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Applications and Southern 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 Southern are associated (or correlated) with Science Applications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Applications has no effect on the direction of Southern i.e., Southern and Science Applications go up and down completely randomly.
Pair Corralation between Southern and Science Applications
Assuming the 90 days horizon The Southern is expected to generate 0.22 times more return on investment than Science Applications. However, The Southern is 4.5 times less risky than Science Applications. It trades about -0.14 of its potential returns per unit of risk. Science Applications International is currently generating about -0.29 per unit of risk. If you would invest 8,256 in The Southern on September 13, 2024 and sell it today you would lose (231.00) from holding The Southern or give up 2.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Southern vs. Science Applications Internati
Performance |
| Timeline |
| Southern |
| Science Applications |
Southern and Science Applications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern and Science Applications
The main advantage of trading using opposite Southern and Science Applications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern position performs unexpectedly, Science Applications 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 Science Applications will offset losses from the drop in Science Applications' long position.| Southern vs. Zijin Mining Group | Southern vs. Hitachi Construction Machinery | Southern vs. MCEWEN MINING INC | Southern vs. HYDROFARM HLD GRP |
| Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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