Correlation Between SCI Pharmtech and Wellell

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

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

Diversification Opportunities for SCI Pharmtech and Wellell

0.14

Correlation Coefficient

SCI Pharmtech  Wellell

Average diversification

The 3 months correlation between SCI and Wellell is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding SCI Pharmtech and Wellell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wellell 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 Wellell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wellell has no effect on the direction of SCI Pharmtech i.e., SCI Pharmtech and Wellell go up and down completely randomly.

Pair Corralation between SCI Pharmtech and Wellell

Assuming the 90 days trading horizon SCI Pharmtech is expected to under-perform the Wellell. But the stock apears to be less risky and, when comparing its historical volatility, SCI Pharmtech is 1.65 times less risky than Wellell. The stock trades about -0.22 of its potential returns per unit of risk. The Wellell is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,475  in Wellell on December 5, 2024 and sell it today you would earn a total of  35.00  from holding Wellell or generate 1.41% return on investment over 90 days.

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

SCI Pharmtech  vs.  Wellell

SCI Pharmtech

Risk-Adjusted Performance

Very Weak

Over the last 90 days SCI Pharmtech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Wellell

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wellell are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Wellell 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 Wellell

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

The idea behind SCI Pharmtech and Wellell 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.