Correlation Between Airtac International and Sinbon Electronics

Can any of the company-specific risk be diversified away by investing in both Airtac International and Sinbon Electronics 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 Airtac International and Sinbon Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Airtac International Group and Sinbon Electronics Co, you can compare the effects of market volatilities on Airtac International and Sinbon Electronics 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 Airtac International with a short position of Sinbon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airtac International and Sinbon Electronics.

Diversification Opportunities for Airtac International and Sinbon Electronics

0.71

Correlation Coefficient

Airtac International  Sinbon Electronics

Poor diversification

The 3 months correlation between Airtac and Sinbon is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Airtac International Group and Sinbon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinbon Electronics and Airtac International 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 Airtac International Group are associated (or correlated) with Sinbon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinbon Electronics has no effect on the direction of Airtac International i.e., Airtac International and Sinbon Electronics go up and down completely randomly.

Pair Corralation between Airtac International and Sinbon Electronics

Assuming the 90 days trading horizon Airtac International Group is expected to generate 0.87 times more return on investment than Sinbon Electronics. However, Airtac International Group is 1.15 times less risky than Sinbon Electronics. It trades about 0.11 of its potential returns per unit of risk. Sinbon Electronics Co is currently generating about 0.04 per unit of risk. If you would invest  83,900  in Airtac International Group on December 27, 2024 and sell it today you would earn a total of  10,300  from holding Airtac International Group or generate 12.28% return on investment over 90 days.

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

Airtac International Group  vs.  Sinbon Electronics Co

Airtac International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Airtac International Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Airtac International showed solid returns over the last few months and may actually be approaching a breakup point.

Sinbon Electronics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sinbon Electronics Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Sinbon Electronics 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 Airtac International and Sinbon Electronics

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

The idea behind Airtac International Group and Sinbon Electronics 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.