Correlation Between Sieyuan Electric and Postal Savings

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

By analyzing existing cross correlation between Sieyuan Electric Co and Postal Savings Bank, you can compare the effects of market volatilities on Sieyuan Electric and Postal Savings 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 Sieyuan Electric with a short position of Postal Savings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sieyuan Electric and Postal Savings.

Diversification Opportunities for Sieyuan Electric and Postal Savings

0.59

Correlation Coefficient

Sieyuan Electric  Postal Savings

Very weak diversification

The 3 months correlation between Sieyuan and Postal is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sieyuan Electric Co and Postal Savings Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Savings Bank and Sieyuan Electric 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 Sieyuan Electric Co are associated (or correlated) with Postal Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Savings Bank has no effect on the direction of Sieyuan Electric i.e., Sieyuan Electric and Postal Savings go up and down completely randomly.

Pair Corralation between Sieyuan Electric and Postal Savings

Assuming the 90 days trading horizon Sieyuan Electric Co is expected to generate 1.39 times more return on investment than Postal Savings. However, Sieyuan Electric is 1.39 times more volatile than Postal Savings Bank. It trades about 0.08 of its potential returns per unit of risk. Postal Savings Bank is currently generating about 0.08 per unit of risk. If you would invest  4,975  in Sieyuan Electric Co on September 19, 2024 and sell it today you would earn a total of  2,102  from holding Sieyuan Electric Co or generate 42.25% return on investment over 90 days.

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

Sieyuan Electric Co  vs.  Postal Savings Bank

Sieyuan Electric

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sieyuan Electric Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sieyuan Electric is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Postal Savings Bank

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Postal Savings Bank are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Postal Savings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sieyuan Electric and Postal Savings

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

The idea behind Sieyuan Electric Co and Postal Savings Bank 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.