Correlation Between Chengdu Spaceon and Olympic Circuit

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

By analyzing existing cross correlation between Chengdu Spaceon Electronics and Olympic Circuit Technology, you can compare the effects of market volatilities on Chengdu Spaceon and Olympic Circuit 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 Chengdu Spaceon with a short position of Olympic Circuit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu Spaceon and Olympic Circuit.

Diversification Opportunities for Chengdu Spaceon and Olympic Circuit

0.32

Correlation Coefficient

Chengdu Spaceon  Olympic Circuit

Weak diversification

The 3 months correlation between Chengdu and Olympic is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu Spaceon Electronics and Olympic Circuit Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Circuit Tech and Chengdu Spaceon 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 Chengdu Spaceon Electronics are associated (or correlated) with Olympic Circuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympic Circuit Tech has no effect on the direction of Chengdu Spaceon i.e., Chengdu Spaceon and Olympic Circuit go up and down completely randomly.

Pair Corralation between Chengdu Spaceon and Olympic Circuit

Assuming the 90 days trading horizon Chengdu Spaceon is expected to generate 35.54 times less return on investment than Olympic Circuit. But when comparing it to its historical volatility, Chengdu Spaceon Electronics is 1.21 times less risky than Olympic Circuit. It trades about 0.0 of its potential returns per unit of risk. Olympic Circuit Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,563  in Olympic Circuit Technology on October 12, 2024 and sell it today you would earn a total of  1,595  from holding Olympic Circuit Technology or generate 102.05% return on investment over 90 days.

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

Chengdu Spaceon Electronics  vs.  Olympic Circuit Technology

Chengdu Spaceon Elec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chengdu Spaceon Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Chengdu Spaceon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Olympic Circuit Tech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Olympic Circuit Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Olympic Circuit sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chengdu Spaceon and Olympic Circuit

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

The idea behind Chengdu Spaceon Electronics and Olympic Circuit Technology 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..