Correlation Between Supercom and Waters
Can any of the company-specific risk be diversified away by investing in both Supercom and Waters 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 Supercom and Waters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Supercom and Waters, you can compare the effects of market volatilities on Supercom and Waters 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 Supercom with a short position of Waters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supercom and Waters.
Diversification Opportunities for Supercom and Waters
Very weak diversification
The 3 months correlation between Supercom and Waters is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Supercom and Waters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waters and Supercom 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 Supercom are associated (or correlated) with Waters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waters has no effect on the direction of Supercom i.e., Supercom and Waters go up and down completely randomly.
Pair Corralation between Supercom and Waters
Given the investment horizon of 90 days Supercom is expected to under-perform the Waters. In addition to that, Supercom is 4.55 times more volatile than Waters. It trades about -0.02 of its total potential returns per unit of risk. Waters is currently generating about 0.02 per unit of volatility. If you would invest 33,653 in Waters on August 30, 2024 and sell it today you would earn a total of 5,162 from holding Waters or generate 15.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Supercom vs. Waters
Performance |
| Timeline |
| Supercom |
| Waters |
Supercom and Waters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supercom and Waters
The main advantage of trading using opposite Supercom and Waters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supercom position performs unexpectedly, Waters 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 Waters will offset losses from the drop in Waters' long position.| Supercom vs. Fabrinet | Supercom vs. Knowles Cor | Supercom vs. Ubiquiti Networks | Supercom vs. AmpliTech Group |
| Waters vs. IDEXX Laboratories | Waters vs. IQVIA Holdings | Waters vs. Charles River Laboratories | Waters vs. Revvity |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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