Correlation Between StShine Optical and Arima Communications
Can any of the company-specific risk be diversified away by investing in both StShine Optical and Arima Communications 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 StShine Optical and Arima Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between StShine Optical Co and Arima Communications Corp, you can compare the effects of market volatilities on StShine Optical and Arima Communications 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 StShine Optical with a short position of Arima Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of StShine Optical and Arima Communications.
Diversification Opportunities for StShine Optical and Arima Communications
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between StShine and Arima is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding StShine Optical Co and Arima Communications Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arima Communications Corp and StShine Optical 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 StShine Optical Co are associated (or correlated) with Arima Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arima Communications Corp has no effect on the direction of StShine Optical i.e., StShine Optical and Arima Communications go up and down completely randomly.
Pair Corralation between StShine Optical and Arima Communications
Assuming the 90 days trading horizon StShine Optical Co is expected to under-perform the Arima Communications. But the stock apears to be less risky and, when comparing its historical volatility, StShine Optical Co is 13.9 times less risky than Arima Communications. The stock trades about -0.03 of its potential returns per unit of risk. The Arima Communications Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 589.00 in Arima Communications Corp on December 4, 2024 and sell it today you would earn a total of 1,381 from holding Arima Communications Corp or generate 234.47% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
StShine Optical Co vs. Arima Communications Corp
Performance |
Timeline |
StShine Optical |
Arima Communications Corp |
StShine Optical and Arima Communications Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with StShine Optical and Arima Communications
The main advantage of trading using opposite StShine Optical and Arima Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if StShine Optical position performs unexpectedly, Arima Communications 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 Arima Communications will offset losses from the drop in Arima Communications' long position.StShine Optical vs. Daxin Materials Corp | StShine Optical vs. General Plastic Industrial | StShine Optical vs. Kenda Rubber Industrial | StShine Optical vs. Fulin Plastic Industry |
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Check out your portfolio center.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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