Correlation Between Songz Automobile and Sinomine Resource

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

By analyzing existing cross correlation between Songz Automobile Air and Sinomine Resource Exploration, you can compare the effects of market volatilities on Songz Automobile and Sinomine Resource 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 Songz Automobile with a short position of Sinomine Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Songz Automobile and Sinomine Resource.

Diversification Opportunities for Songz Automobile and Sinomine Resource

0.62

Correlation Coefficient

Songz Automobile  Sinomine Resource

Poor diversification

The 3 months correlation between Songz and Sinomine is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Songz Automobile Air and Sinomine Resource Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinomine Resource and Songz Automobile 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 Songz Automobile Air are associated (or correlated) with Sinomine Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinomine Resource has no effect on the direction of Songz Automobile i.e., Songz Automobile and Sinomine Resource go up and down completely randomly.

Pair Corralation between Songz Automobile and Sinomine Resource

Assuming the 90 days trading horizon Songz Automobile is expected to generate 1.43 times less return on investment than Sinomine Resource. In addition to that, Songz Automobile is 1.05 times more volatile than Sinomine Resource Exploration. It trades about 0.06 of its total potential returns per unit of risk. Sinomine Resource Exploration is currently generating about 0.09 per unit of volatility. If you would invest  3,714  in Sinomine Resource Exploration on October 25, 2024 and sell it today you would earn a total of  135.00  from holding Sinomine Resource Exploration or generate 3.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Songz Automobile Air  vs.  Sinomine Resource Exploration

Songz Automobile Air

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Songz Automobile Air are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Songz Automobile may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sinomine Resource

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Songz Automobile and Sinomine Resource

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

The idea behind Songz Automobile Air and Sinomine Resource Exploration 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.