Correlation Between Glodon Software and Sinocelltech

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

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

Diversification Opportunities for Glodon Software and Sinocelltech

0.85

Correlation Coefficient

Glodon Software  Sinocelltech

Very poor diversification

The 3 months correlation between Glodon and Sinocelltech is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Glodon Software Co and Sinocelltech Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinocelltech Group and Glodon Software 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 Glodon Software Co are associated (or correlated) with Sinocelltech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinocelltech Group has no effect on the direction of Glodon Software i.e., Glodon Software and Sinocelltech go up and down completely randomly.

Pair Corralation between Glodon Software and Sinocelltech

Assuming the 90 days trading horizon Glodon Software is expected to generate 1.39 times less return on investment than Sinocelltech. In addition to that, Glodon Software is 1.4 times more volatile than Sinocelltech Group. It trades about 0.05 of its total potential returns per unit of risk. Sinocelltech Group is currently generating about 0.1 per unit of volatility. If you would invest  3,804  in Sinocelltech Group on December 5, 2024 and sell it today you would earn a total of  412.00  from holding Sinocelltech Group or generate 10.83% return on investment over 90 days.

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

Glodon Software Co  vs.  Sinocelltech Group

Glodon Software

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Glodon Software Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Glodon Software may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sinocelltech Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sinocelltech Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sinocelltech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Glodon Software and Sinocelltech

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

The idea behind Glodon Software Co and Sinocelltech 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.