Correlation Between SCI Pharmtech and Abnova Taiwan

Can any of the company-specific risk be diversified away by investing in both SCI Pharmtech and Abnova Taiwan 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 SCI Pharmtech and Abnova Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SCI Pharmtech and Abnova Taiwan Corp, you can compare the effects of market volatilities on SCI Pharmtech and Abnova Taiwan 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 SCI Pharmtech with a short position of Abnova Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCI Pharmtech and Abnova Taiwan.

Diversification Opportunities for SCI Pharmtech and Abnova Taiwan

-0.72

Correlation Coefficient

SCI Pharmtech  Abnova Taiwan

Pay attention - limited upside

The 3 months correlation between SCI and Abnova is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding SCI Pharmtech and Abnova Taiwan Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abnova Taiwan Corp and SCI Pharmtech 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 SCI Pharmtech are associated (or correlated) with Abnova Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abnova Taiwan Corp has no effect on the direction of SCI Pharmtech i.e., SCI Pharmtech and Abnova Taiwan go up and down completely randomly.

Pair Corralation between SCI Pharmtech and Abnova Taiwan

Assuming the 90 days trading horizon SCI Pharmtech is expected to generate 1.65 times more return on investment than Abnova Taiwan. However, SCI Pharmtech is 1.65 times more volatile than Abnova Taiwan Corp. It trades about 0.14 of its potential returns per unit of risk. Abnova Taiwan Corp is currently generating about -0.13 per unit of risk. If you would invest  8,710  in SCI Pharmtech on September 13, 2024 and sell it today you would earn a total of  690.00  from holding SCI Pharmtech or generate 7.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

SCI Pharmtech  vs.  Abnova Taiwan Corp

SCI Pharmtech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCI Pharmtech are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, SCI Pharmtech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Abnova Taiwan Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abnova Taiwan Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Abnova Taiwan is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with SCI Pharmtech and Abnova Taiwan

The main advantage of trading using opposite SCI Pharmtech and Abnova Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCI Pharmtech position performs unexpectedly, Abnova Taiwan 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 Abnova Taiwan will offset losses from the drop in Abnova Taiwan's long position.

The idea behind SCI Pharmtech and Abnova Taiwan Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.