Correlation Between SCOTT TECHNOLOGY and Montea Comm

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

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

Diversification Opportunities for SCOTT TECHNOLOGY and Montea Comm

-0.02

Correlation Coefficient

SCOTT TECHNOLOGY  Montea Comm

Good diversification

The 3 months correlation between SCOTT and Montea is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and Montea Comm VA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montea Comm VA 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 Montea Comm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montea Comm VA has no effect on the direction of SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and Montea Comm go up and down completely randomly.

Pair Corralation between SCOTT TECHNOLOGY and Montea Comm

Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to under-perform the Montea Comm. In addition to that, SCOTT TECHNOLOGY is 1.35 times more volatile than Montea Comm VA. It trades about -0.15 of its total potential returns per unit of risk. Montea Comm VA is currently generating about 0.06 per unit of volatility. If you would invest  6,250  in Montea Comm VA on December 20, 2024 and sell it today you would earn a total of  320.00  from holding Montea Comm VA or generate 5.12% return on investment over 90 days.

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

SCOTT TECHNOLOGY  vs.  Montea Comm VA

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 fragile 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.

Montea Comm VA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Montea Comm VA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Montea Comm is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SCOTT TECHNOLOGY and Montea Comm

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

The idea behind SCOTT TECHNOLOGY and Montea Comm VA 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.