Correlation Between Scientific Industries and Encision

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

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

Diversification Opportunities for Scientific Industries and Encision

-0.19

Correlation Coefficient

Scientific Industries  Encision

Good diversification

The 3 months correlation between Scientific and Encision is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Scientific Industries and Encision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encision and Scientific Industries 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 Scientific Industries are associated (or correlated) with Encision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encision has no effect on the direction of Scientific Industries i.e., Scientific Industries and Encision go up and down completely randomly.

Pair Corralation between Scientific Industries and Encision

Given the investment horizon of 90 days Scientific Industries is expected to under-perform the Encision. In addition to that, Scientific Industries is 1.81 times more volatile than Encision. It trades about -0.03 of its total potential returns per unit of risk. Encision is currently generating about -0.01 per unit of volatility. If you would invest  50.00  in Encision on September 29, 2024 and sell it today you would lose (6.00) from holding Encision or give up 12.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	27.16%
Values	Daily Returns

Scientific Industries  vs.  Encision

Scientific Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scientific Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Encision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Encision has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Encision is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Scientific Industries and Encision

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

The idea behind Scientific Industries and Encision 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.