Correlation Between Sucampo Pharmaceuticals and SciClone Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Sucampo Pharmaceuticals and SciClone Pharmaceuticals 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 Sucampo Pharmaceuticals and SciClone Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sucampo Pharmaceuticals and SciClone Pharmaceuticals, you can compare the effects of market volatilities on Sucampo Pharmaceuticals and SciClone Pharmaceuticals 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 Sucampo Pharmaceuticals with a short position of SciClone Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sucampo Pharmaceuticals and SciClone Pharmaceuticals.
Diversification Opportunities for Sucampo Pharmaceuticals and SciClone Pharmaceuticals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sucampo and SciClone is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sucampo Pharmaceuticals and SciClone Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SciClone Pharmaceuticals and Sucampo Pharmaceuticals 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 Sucampo Pharmaceuticals are associated (or correlated) with SciClone Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SciClone Pharmaceuticals has no effect on the direction of Sucampo Pharmaceuticals i.e., Sucampo Pharmaceuticals and SciClone Pharmaceuticals go up and down completely randomly.
Pair Corralation between Sucampo Pharmaceuticals and SciClone Pharmaceuticals
If you would invest (100.00) in SciClone Pharmaceuticals on January 19, 2024 and sell it today you would earn a total of 100.00 from holding SciClone Pharmaceuticals or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sucampo Pharmaceuticals vs. SciClone Pharmaceuticals
Performance |
| Timeline |
| Sucampo Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| SciClone Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sucampo Pharmaceuticals and SciClone Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sucampo Pharmaceuticals and SciClone Pharmaceuticals
The main advantage of trading using opposite Sucampo Pharmaceuticals and SciClone Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sucampo Pharmaceuticals position performs unexpectedly, SciClone Pharmaceuticals 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 SciClone Pharmaceuticals will offset losses from the drop in SciClone Pharmaceuticals' long position.The idea behind Sucampo Pharmaceuticals and SciClone Pharmaceuticals 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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Check out your portfolio center.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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