Correlation Between Songz Automobile and Inner Mongolia

Can any of the company-specific risk be diversified away by investing in both Songz Automobile and Inner Mongolia 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 Inner Mongolia 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 Inner Mongolia BaoTou, you can compare the effects of market volatilities on Songz Automobile and Inner Mongolia 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 Inner Mongolia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Songz Automobile and Inner Mongolia.

Diversification Opportunities for Songz Automobile and Inner Mongolia

0.93

Correlation Coefficient

Songz Automobile  Inner Mongolia

Almost no diversification

The 3 months correlation between Songz and Inner is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Songz Automobile Air and Inner Mongolia BaoTou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inner Mongolia BaoTou 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 Inner Mongolia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inner Mongolia BaoTou has no effect on the direction of Songz Automobile i.e., Songz Automobile and Inner Mongolia go up and down completely randomly.

Pair Corralation between Songz Automobile and Inner Mongolia

Assuming the 90 days trading horizon Songz Automobile Air is expected to under-perform the Inner Mongolia. In addition to that, Songz Automobile is 1.36 times more volatile than Inner Mongolia BaoTou. It trades about 0.0 of its total potential returns per unit of risk. Inner Mongolia BaoTou is currently generating about 0.0 per unit of volatility. If you would invest  201.00  in Inner Mongolia BaoTou on October 11, 2024 and sell it today you would lose (21.00) from holding Inner Mongolia BaoTou or give up 10.45% of portfolio value over 90 days.

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

Songz Automobile Air  vs.  Inner Mongolia BaoTou

Songz Automobile Air

Risk-Adjusted Performance

3 of 100

Insignificant

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

Inner Mongolia BaoTou

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Songz Automobile and Inner Mongolia

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

The idea behind Songz Automobile Air and Inner Mongolia BaoTou 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.