Correlation Between Auction Technology and Judges Scientific

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

By analyzing existing cross correlation between Auction Technology Group and Judges Scientific Plc, you can compare the effects of market volatilities on Auction Technology and Judges Scientific 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 Auction Technology with a short position of Judges Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auction Technology and Judges Scientific.

Diversification Opportunities for Auction Technology and Judges Scientific

-0.54

Correlation Coefficient

Auction Technology  Judges Scientific

Excellent diversification

The 3 months correlation between Auction and Judges is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Auction Technology Group and Judges Scientific Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Judges Scientific Plc and Auction Technology 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 Auction Technology Group are associated (or correlated) with Judges Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Judges Scientific Plc has no effect on the direction of Auction Technology i.e., Auction Technology and Judges Scientific go up and down completely randomly.

Pair Corralation between Auction Technology and Judges Scientific

Assuming the 90 days trading horizon Auction Technology Group is expected to generate 0.73 times more return on investment than Judges Scientific. However, Auction Technology Group is 1.36 times less risky than Judges Scientific. It trades about 0.03 of its potential returns per unit of risk. Judges Scientific Plc is currently generating about -0.09 per unit of risk. If you would invest  55,400  in Auction Technology Group on December 22, 2024 and sell it today you would earn a total of  1,300  from holding Auction Technology Group or generate 2.35% return on investment over 90 days.

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

Auction Technology Group  vs.  Judges Scientific Plc

Auction Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Auction Technology Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Auction Technology is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Judges Scientific Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Judges Scientific Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Auction Technology and Judges Scientific

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

The idea behind Auction Technology Group and Judges Scientific Plc 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.