Correlation Between Scienjoy Holding and Software Acquisition

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

By analyzing existing cross correlation between Scienjoy Holding Corp and Software Acquisition Group, you can compare the effects of market volatilities on Scienjoy Holding and Software Acquisition 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 Scienjoy Holding with a short position of Software Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scienjoy Holding and Software Acquisition.

Diversification Opportunities for Scienjoy Holding and Software Acquisition

-0.12

Correlation Coefficient

Scienjoy Holding  Software Acquisition

Good diversification

The 3 months correlation between Scienjoy and Software is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Scienjoy Holding Corp and Software Acquisition Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Software Acquisition and Scienjoy Holding 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 Scienjoy Holding Corp are associated (or correlated) with Software Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Software Acquisition has no effect on the direction of Scienjoy Holding i.e., Scienjoy Holding and Software Acquisition go up and down completely randomly.

Pair Corralation between Scienjoy Holding and Software Acquisition

Allowing for the 90-day total investment horizon Scienjoy Holding Corp is expected to under-perform the Software Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Scienjoy Holding Corp is 5.02 times less risky than Software Acquisition. The stock trades about -0.01 of its potential returns per unit of risk. The Software Acquisition Group is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  0.98  in Software Acquisition Group on May 1, 2025 and sell it today you would earn a total of  1.01  from holding Software Acquisition Group or generate 103.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	45.9%
Values	Daily Returns

Scienjoy Holding Corp  vs.  Software Acquisition Group

Scienjoy Holding Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Scienjoy Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady forward-looking indicators, Scienjoy Holding is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Software Acquisition

Risk-Adjusted Performance

Solid

Over the last 90 days Software Acquisition Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unsteady technical and fundamental indicators, Software Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scienjoy Holding and Software Acquisition

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

The idea behind Scienjoy Holding Corp and Software Acquisition Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.