Correlation Between DOCDATA and Scientific Games

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

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

Diversification Opportunities for DOCDATA and Scientific Games

-0.26

Correlation Coefficient

DOCDATA  Scientific Games

Very good diversification

The 3 months correlation between DOCDATA and Scientific is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding DOCDATA and Scientific Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientific Games and DOCDATA 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 DOCDATA are associated (or correlated) with Scientific Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientific Games has no effect on the direction of DOCDATA i.e., DOCDATA and Scientific Games go up and down completely randomly.

Pair Corralation between DOCDATA and Scientific Games

Assuming the 90 days trading horizon DOCDATA is expected to under-perform the Scientific Games. In addition to that, DOCDATA is 2.29 times more volatile than Scientific Games. It trades about -0.04 of its total potential returns per unit of risk. Scientific Games is currently generating about 0.05 per unit of volatility. If you would invest  5,450  in Scientific Games on September 24, 2024 and sell it today you would earn a total of  2,750  from holding Scientific Games or generate 50.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

DOCDATA  vs.  Scientific Games

DOCDATA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DOCDATA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Scientific Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scientific Games has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Scientific Games is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DOCDATA and Scientific Games

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

The idea behind DOCDATA and Scientific Games 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.