Correlation Between Sincere Navigation and Cheng Uei

Can any of the company-specific risk be diversified away by investing in both Sincere Navigation and Cheng Uei 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 Sincere Navigation and Cheng Uei into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sincere Navigation Corp and Cheng Uei Precision, you can compare the effects of market volatilities on Sincere Navigation and Cheng Uei 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 Sincere Navigation with a short position of Cheng Uei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sincere Navigation and Cheng Uei.

Diversification Opportunities for Sincere Navigation and Cheng Uei

-0.35

Correlation Coefficient

Sincere Navigation  Cheng Uei

Very good diversification

The 3 months correlation between Sincere and Cheng is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sincere Navigation Corp and Cheng Uei Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Uei Precision and Sincere Navigation 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 Sincere Navigation Corp are associated (or correlated) with Cheng Uei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Uei Precision has no effect on the direction of Sincere Navigation i.e., Sincere Navigation and Cheng Uei go up and down completely randomly.

Pair Corralation between Sincere Navigation and Cheng Uei

Assuming the 90 days trading horizon Sincere Navigation Corp is expected to generate 1.1 times more return on investment than Cheng Uei. However, Sincere Navigation is 1.1 times more volatile than Cheng Uei Precision. It trades about 0.08 of its potential returns per unit of risk. Cheng Uei Precision is currently generating about -0.15 per unit of risk. If you would invest  2,515  in Sincere Navigation Corp on December 24, 2024 and sell it today you would earn a total of  195.00  from holding Sincere Navigation Corp or generate 7.75% return on investment over 90 days.

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

Sincere Navigation Corp  vs.  Cheng Uei Precision

Sincere Navigation Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sincere Navigation Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sincere Navigation may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Cheng Uei Precision

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cheng Uei Precision 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Sincere Navigation and Cheng Uei

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

The idea behind Sincere Navigation Corp and Cheng Uei Precision 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.