Correlation Between Judges Scientific and Auction Technology

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

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

Diversification Opportunities for Judges Scientific and Auction Technology

-0.64

Correlation Coefficient

Judges Scientific  Auction Technology

Excellent diversification

The 3 months correlation between Judges and Auction is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Judges Scientific Plc and Auction Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auction Technology and Judges Scientific 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 Judges Scientific Plc are associated (or correlated) with Auction Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auction Technology has no effect on the direction of Judges Scientific i.e., Judges Scientific and Auction Technology go up and down completely randomly.

Pair Corralation between Judges Scientific and Auction Technology

Assuming the 90 days trading horizon Judges Scientific Plc is expected to under-perform the Auction Technology. In addition to that, Judges Scientific is 1.19 times more volatile than Auction Technology Group. It trades about -0.39 of its total potential returns per unit of risk. Auction Technology Group is currently generating about 0.34 per unit of volatility. If you would invest  54,300  in Auction Technology Group on October 26, 2024 and sell it today you would earn a total of  6,200  from holding Auction Technology Group or generate 11.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Judges Scientific Plc  vs.  Auction Technology Group

Judges Scientific Plc

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Auction Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Auction Technology Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Auction Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Judges Scientific and Auction Technology

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

The idea behind Judges Scientific Plc and Auction Technology Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.