Correlation Between Sinosteel Engineering and Juewei Food

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

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

Diversification Opportunities for Sinosteel Engineering and Juewei Food

0.68

Correlation Coefficient

Sinosteel Engineering  Juewei Food

Poor diversification

The 3 months correlation between Sinosteel and Juewei is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sinosteel Engineering and and Juewei Food Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juewei Food and Sinosteel Engineering 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 Sinosteel Engineering and are associated (or correlated) with Juewei Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juewei Food has no effect on the direction of Sinosteel Engineering i.e., Sinosteel Engineering and Juewei Food go up and down completely randomly.

Pair Corralation between Sinosteel Engineering and Juewei Food

Assuming the 90 days trading horizon Sinosteel Engineering and is expected to generate 0.77 times more return on investment than Juewei Food. However, Sinosteel Engineering and is 1.29 times less risky than Juewei Food. It trades about -0.02 of its potential returns per unit of risk. Juewei Food Co is currently generating about -0.14 per unit of risk. If you would invest  714.00  in Sinosteel Engineering and on December 1, 2024 and sell it today you would lose (26.00) from holding Sinosteel Engineering and or give up 3.64% of portfolio value over 90 days.

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

Sinosteel Engineering and  vs.  Juewei Food Co

Sinosteel Engineering and

Risk-Adjusted Performance

Very Weak

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

Juewei Food

Risk-Adjusted Performance

Very Weak

Over the last 90 days Juewei Food Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sinosteel Engineering and Juewei Food

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

The idea behind Sinosteel Engineering and and Juewei Food Co 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.