Correlation Between SERI INDUSTRIAL and Science Applications

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

By analyzing existing cross correlation between SERI INDUSTRIAL EO and Science Applications International, you can compare the effects of market volatilities on SERI INDUSTRIAL and Science Applications 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 SERI INDUSTRIAL with a short position of Science Applications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SERI INDUSTRIAL and Science Applications.

Diversification Opportunities for SERI INDUSTRIAL and Science Applications

0.28

Correlation Coefficient

SERI INDUSTRIAL  Science Applications

Modest diversification

The 3 months correlation between SERI and Science is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding SERI INDUSTRIAL EO and Science Applications Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Applications and SERI INDUSTRIAL 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 SERI INDUSTRIAL EO are associated (or correlated) with Science Applications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Applications has no effect on the direction of SERI INDUSTRIAL i.e., SERI INDUSTRIAL and Science Applications go up and down completely randomly.

Pair Corralation between SERI INDUSTRIAL and Science Applications

Assuming the 90 days trading horizon SERI INDUSTRIAL EO is expected to under-perform the Science Applications. In addition to that, SERI INDUSTRIAL is 1.49 times more volatile than Science Applications International. It trades about -0.26 of its total potential returns per unit of risk. Science Applications International is currently generating about -0.27 per unit of volatility. If you would invest  11,700  in Science Applications International on October 5, 2024 and sell it today you would lose (900.00) from holding Science Applications International or give up 7.69% of portfolio value over 90 days.

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

SERI INDUSTRIAL EO  vs.  Science Applications Internati

SERI INDUSTRIAL EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SERI INDUSTRIAL EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Science Applications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Science Applications International 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SERI INDUSTRIAL and Science Applications

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

The idea behind SERI INDUSTRIAL EO and Science Applications International 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..