Correlation Between SCOTT TECHNOLOGY and Halliburton

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

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

Diversification Opportunities for SCOTT TECHNOLOGY and Halliburton

0.3

Correlation Coefficient

SCOTT TECHNOLOGY  Halliburton

Weak diversification

The 3 months correlation between SCOTT and Halliburton is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton 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 Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and Halliburton go up and down completely randomly.

Pair Corralation between SCOTT TECHNOLOGY and Halliburton

Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to generate 1.35 times more return on investment than Halliburton. However, SCOTT TECHNOLOGY is 1.35 times more volatile than Halliburton. It trades about 0.14 of its potential returns per unit of risk. Halliburton is currently generating about 0.06 per unit of risk. If you would invest  99.00  in SCOTT TECHNOLOGY on October 25, 2024 and sell it today you would earn a total of  26.00  from holding SCOTT TECHNOLOGY or generate 26.26% return on investment over 90 days.

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

SCOTT TECHNOLOGY  vs.  Halliburton

SCOTT TECHNOLOGY

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SCOTT TECHNOLOGY are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical indicators, SCOTT TECHNOLOGY exhibited solid returns over the last few months and may actually be approaching a breakup point.

Halliburton

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Halliburton are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile essential indicators, Halliburton may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SCOTT TECHNOLOGY and Halliburton

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

The idea behind SCOTT TECHNOLOGY and Halliburton 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.