Correlation Between SCOTT TECHNOLOGY and Cheniere Energy

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

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

Diversification Opportunities for SCOTT TECHNOLOGY and Cheniere Energy

0.48

Correlation Coefficient

SCOTT TECHNOLOGY  Cheniere Energy

Very weak diversification

The 3 months correlation between SCOTT and Cheniere is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and Cheniere Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy and SCOTT 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 SCOTT TECHNOLOGY are associated (or correlated) with Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy has no effect on the direction of SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and Cheniere Energy go up and down completely randomly.

Pair Corralation between SCOTT TECHNOLOGY and Cheniere Energy

Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to under-perform the Cheniere Energy. But the stock apears to be less risky and, when comparing its historical volatility, SCOTT TECHNOLOGY is 1.21 times less risky than Cheniere Energy. The stock trades about -0.2 of its potential returns per unit of risk. The Cheniere Energy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  20,025  in Cheniere Energy on December 28, 2024 and sell it today you would earn a total of  1,375  from holding Cheniere Energy or generate 6.87% return on investment over 90 days.

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

SCOTT TECHNOLOGY  vs.  Cheniere Energy

SCOTT TECHNOLOGY

Risk-Adjusted Performance

Very Weak

Over the last 90 days SCOTT TECHNOLOGY 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 indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Cheniere Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cheniere Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Cheniere Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SCOTT TECHNOLOGY and Cheniere Energy

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

The idea behind SCOTT TECHNOLOGY and Cheniere Energy 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.