Correlation Between Changzhou Almaden and SGSG Sciencetechnolog

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

By analyzing existing cross correlation between Changzhou Almaden Co and SGSG Sciencetechnology Co, you can compare the effects of market volatilities on Changzhou Almaden and SGSG Sciencetechnolog 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 Changzhou Almaden with a short position of SGSG Sciencetechnolog. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changzhou Almaden and SGSG Sciencetechnolog.

Diversification Opportunities for Changzhou Almaden and SGSG Sciencetechnolog

-0.22

Correlation Coefficient

Changzhou Almaden  SGSG Sciencetechnolog

Very good diversification

The 3 months correlation between Changzhou and SGSG is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Changzhou Almaden Co and SGSG Sciencetechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGSG Sciencetechnology and Changzhou Almaden 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 Changzhou Almaden Co are associated (or correlated) with SGSG Sciencetechnolog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGSG Sciencetechnology has no effect on the direction of Changzhou Almaden i.e., Changzhou Almaden and SGSG Sciencetechnolog go up and down completely randomly.

Pair Corralation between Changzhou Almaden and SGSG Sciencetechnolog

Assuming the 90 days trading horizon Changzhou Almaden Co is expected to under-perform the SGSG Sciencetechnolog. But the stock apears to be less risky and, when comparing its historical volatility, Changzhou Almaden Co is 2.45 times less risky than SGSG Sciencetechnolog. The stock trades about -0.07 of its potential returns per unit of risk. The SGSG Sciencetechnology Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,124  in SGSG Sciencetechnology Co on October 7, 2024 and sell it today you would earn a total of  4,715  from holding SGSG Sciencetechnology Co or generate 419.48% return on investment over 90 days.

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

Changzhou Almaden Co  vs.  SGSG Sciencetechnology Co

Changzhou Almaden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Changzhou Almaden 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

SGSG Sciencetechnology

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SGSG Sciencetechnology Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SGSG Sciencetechnolog sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Changzhou Almaden and SGSG Sciencetechnolog

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

The idea behind Changzhou Almaden Co and SGSG Sciencetechnology 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.