Correlation Between Scientex Packaging and Advanced Packaging

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

By analyzing existing cross correlation between Scientex Packaging and Advanced Packaging Tech, you can compare the effects of market volatilities on Scientex Packaging and Advanced Packaging 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 Scientex Packaging with a short position of Advanced Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scientex Packaging and Advanced Packaging.

Diversification Opportunities for Scientex Packaging and Advanced Packaging

0.3

Correlation Coefficient

Scientex Packaging  Advanced Packaging

Weak diversification

The 3 months correlation between Scientex and Advanced is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Scientex Packaging and Advanced Packaging Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Packaging Tech and Scientex Packaging 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 Scientex Packaging are associated (or correlated) with Advanced Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Packaging Tech has no effect on the direction of Scientex Packaging i.e., Scientex Packaging and Advanced Packaging go up and down completely randomly.

Pair Corralation between Scientex Packaging and Advanced Packaging

Assuming the 90 days trading horizon Scientex Packaging is expected to generate 1.23 times more return on investment than Advanced Packaging. However, Scientex Packaging is 1.23 times more volatile than Advanced Packaging Tech. It trades about -0.01 of its potential returns per unit of risk. Advanced Packaging Tech is currently generating about -0.05 per unit of risk. If you would invest  188.00  in Scientex Packaging on September 27, 2024 and sell it today you would lose (2.00) from holding Scientex Packaging or give up 1.06% of portfolio value over 90 days.

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

Scientex Packaging  vs.  Advanced Packaging Tech

Scientex Packaging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scientex Packaging has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Scientex Packaging is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Advanced Packaging Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Packaging Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Advanced Packaging is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Scientex Packaging and Advanced Packaging

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

The idea behind Scientex Packaging and Advanced Packaging Tech 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.