Correlation Between SCI Information and I Components

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

By analyzing existing cross correlation between SCI Information Service and i Components Co, you can compare the effects of market volatilities on SCI Information and I Components 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 Information with a short position of I Components. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCI Information and I Components.

Diversification Opportunities for SCI Information and I Components

0.33

Correlation Coefficient

SCI Information  I Components

Weak diversification

The 3 months correlation between SCI and 059100 is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding SCI Information Service and i Components Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on i Components and SCI Information 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 Information Service are associated (or correlated) with I Components. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of i Components has no effect on the direction of SCI Information i.e., SCI Information and I Components go up and down completely randomly.

Pair Corralation between SCI Information and I Components

Assuming the 90 days trading horizon SCI Information Service is expected to generate 1.13 times more return on investment than I Components. However, SCI Information is 1.13 times more volatile than i Components Co. It trades about 0.26 of its potential returns per unit of risk. i Components Co is currently generating about 0.26 per unit of risk. If you would invest  214,500  in SCI Information Service on October 10, 2024 and sell it today you would earn a total of  22,500  from holding SCI Information Service or generate 10.49% return on investment over 90 days.

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

SCI Information Service  vs.  i Components Co

SCI Information Service

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SCI Information Service are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SCI Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

i Components

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in i Components Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, I Components may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SCI Information and I Components

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

The idea behind SCI Information Service and i Components Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.