Correlation Between Sinomine Resource and Shenzhen Clou

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

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

Diversification Opportunities for Sinomine Resource and Shenzhen Clou

0.83

Correlation Coefficient

Sinomine Resource  Shenzhen Clou

Very poor diversification

The 3 months correlation between Sinomine and Shenzhen is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sinomine Resource Exploration and Shenzhen Clou Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Clou Electronics and Sinomine Resource 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 Sinomine Resource Exploration are associated (or correlated) with Shenzhen Clou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Clou Electronics has no effect on the direction of Sinomine Resource i.e., Sinomine Resource and Shenzhen Clou go up and down completely randomly.

Pair Corralation between Sinomine Resource and Shenzhen Clou

Assuming the 90 days trading horizon Sinomine Resource Exploration is expected to generate 1.07 times more return on investment than Shenzhen Clou. However, Sinomine Resource is 1.07 times more volatile than Shenzhen Clou Electronics. It trades about 0.1 of its potential returns per unit of risk. Shenzhen Clou Electronics is currently generating about 0.1 per unit of risk. If you would invest  2,611  in Sinomine Resource Exploration on September 21, 2024 and sell it today you would earn a total of  978.00  from holding Sinomine Resource Exploration or generate 37.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.19%
Values	Daily Returns

Sinomine Resource Exploration  vs.  Shenzhen Clou Electronics

Sinomine Resource

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sinomine Resource Exploration are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sinomine Resource sustained solid returns over the last few months and may actually be approaching a breakup point.

Shenzhen Clou Electronics

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Clou Electronics are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Clou sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sinomine Resource and Shenzhen Clou

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

The idea behind Sinomine Resource Exploration and Shenzhen Clou Electronics 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 Commodity Directory module to find actively traded commodities issued by global exchanges.