Correlation Between Parker Hannifin and Scorpius Holdings

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

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

Diversification Opportunities for Parker Hannifin and Scorpius Holdings

0.08

Correlation Coefficient

Parker Hannifin  Scorpius Holdings

Significant diversification

The 3 months correlation between Parker and Scorpius is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Scorpius Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scorpius Holdings and Parker Hannifin 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 Parker Hannifin are associated (or correlated) with Scorpius Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scorpius Holdings has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Scorpius Holdings go up and down completely randomly.

Pair Corralation between Parker Hannifin and Scorpius Holdings

Allowing for the 90-day total investment horizon Parker Hannifin is expected to generate 0.14 times more return on investment than Scorpius Holdings. However, Parker Hannifin is 7.19 times less risky than Scorpius Holdings. It trades about 0.1 of its potential returns per unit of risk. Scorpius Holdings is currently generating about -0.04 per unit of risk. If you would invest  28,999  in Parker Hannifin on October 10, 2024 and sell it today you would earn a total of  34,524  from holding Parker Hannifin or generate 119.05% return on investment over 90 days.

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

Parker Hannifin  vs.  Scorpius Holdings

Parker Hannifin

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Parker Hannifin are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Parker Hannifin is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Scorpius Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scorpius Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Parker Hannifin and Scorpius Holdings

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

The idea behind Parker Hannifin and Scorpius Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.