Correlation Between USWE SPORTS and SCOTT TECHNOLOGY

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

By analyzing existing cross correlation between USWE SPORTS AB and SCOTT TECHNOLOGY, you can compare the effects of market volatilities on USWE SPORTS and SCOTT TECHNOLOGY 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 USWE SPORTS with a short position of SCOTT TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and SCOTT TECHNOLOGY.

Diversification Opportunities for USWE SPORTS and SCOTT TECHNOLOGY

0.61

Correlation Coefficient

USWE SPORTS  SCOTT TECHNOLOGY

Poor diversification

The 3 months correlation between USWE and SCOTT is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY and USWE SPORTS 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 USWE SPORTS AB are associated (or correlated) with SCOTT TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOTT TECHNOLOGY has no effect on the direction of USWE SPORTS i.e., USWE SPORTS and SCOTT TECHNOLOGY go up and down completely randomly.

Pair Corralation between USWE SPORTS and SCOTT TECHNOLOGY

Assuming the 90 days horizon USWE SPORTS AB is expected to under-perform the SCOTT TECHNOLOGY. In addition to that, USWE SPORTS is 1.35 times more volatile than SCOTT TECHNOLOGY. It trades about -0.02 of its total potential returns per unit of risk. SCOTT TECHNOLOGY is currently generating about 0.01 per unit of volatility. If you would invest  135.00  in SCOTT TECHNOLOGY on September 20, 2024 and sell it today you would lose (12.00) from holding SCOTT TECHNOLOGY or give up 8.89% of portfolio value over 90 days.

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

USWE SPORTS AB  vs.  SCOTT TECHNOLOGY

USWE SPORTS AB

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in USWE SPORTS AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, USWE SPORTS reported solid returns over the last few months and may actually be approaching a breakup point.

SCOTT TECHNOLOGY

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCOTT TECHNOLOGY are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical indicators, SCOTT TECHNOLOGY may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with USWE SPORTS and SCOTT TECHNOLOGY

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

The idea behind USWE SPORTS AB and SCOTT TECHNOLOGY 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.