Correlation Between Asia Polymer and San Fang

Can any of the company-specific risk be diversified away by investing in both Asia Polymer and San Fang 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 Asia Polymer and San Fang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asia Polymer Corp and San Fang Chemical, you can compare the effects of market volatilities on Asia Polymer and San Fang 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 Asia Polymer with a short position of San Fang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Polymer and San Fang.

Diversification Opportunities for Asia Polymer and San Fang

0.15

Correlation Coefficient

Asia Polymer  San Fang

Average diversification

The 3 months correlation between Asia and San is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Asia Polymer Corp and San Fang Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Fang Chemical and Asia Polymer 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 Asia Polymer Corp are associated (or correlated) with San Fang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Fang Chemical has no effect on the direction of Asia Polymer i.e., Asia Polymer and San Fang go up and down completely randomly.

Pair Corralation between Asia Polymer and San Fang

Assuming the 90 days trading horizon Asia Polymer Corp is expected to under-perform the San Fang. But the stock apears to be less risky and, when comparing its historical volatility, Asia Polymer Corp is 1.53 times less risky than San Fang. The stock trades about -0.42 of its potential returns per unit of risk. The San Fang Chemical is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest  4,320  in San Fang Chemical on September 16, 2024 and sell it today you would lose (515.00) from holding San Fang Chemical or give up 11.92% of portfolio value over 90 days.

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

Asia Polymer Corp  vs.  San Fang Chemical

Asia Polymer Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Polymer Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

San Fang Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days San Fang Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, San Fang is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Asia Polymer and San Fang

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

The idea behind Asia Polymer Corp and San Fang Chemical 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.