Correlation Between Guangdong Silvere and Sinofibers Technology

Can any of the company-specific risk be diversified away by investing in both Guangdong Silvere and Sinofibers Technology 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 Guangdong Silvere and Sinofibers Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guangdong Silvere Sci and Sinofibers Technology Co, you can compare the effects of market volatilities on Guangdong Silvere and Sinofibers Technology 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 Guangdong Silvere with a short position of Sinofibers Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Silvere and Sinofibers Technology.

Diversification Opportunities for Guangdong Silvere and Sinofibers Technology

0.36

Correlation Coefficient

Guangdong Silvere  Sinofibers Technology

Weak diversification

The 3 months correlation between Guangdong and Sinofibers is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Silvere Sci and Sinofibers Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinofibers Technology and Guangdong Silvere 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 Guangdong Silvere Sci are associated (or correlated) with Sinofibers Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinofibers Technology has no effect on the direction of Guangdong Silvere i.e., Guangdong Silvere and Sinofibers Technology go up and down completely randomly.

Pair Corralation between Guangdong Silvere and Sinofibers Technology

Assuming the 90 days trading horizon Guangdong Silvere Sci is expected to generate 1.1 times more return on investment than Sinofibers Technology. However, Guangdong Silvere is 1.1 times more volatile than Sinofibers Technology Co. It trades about 0.02 of its potential returns per unit of risk. Sinofibers Technology Co is currently generating about -0.04 per unit of risk. If you would invest  545.00  in Guangdong Silvere Sci on October 11, 2024 and sell it today you would earn a total of  5.00  from holding Guangdong Silvere Sci or generate 0.92% return on investment over 90 days.

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

Guangdong Silvere Sci  vs.  Sinofibers Technology Co

Guangdong Silvere Sci

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sinofibers Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sinofibers Technology Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sinofibers Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Guangdong Silvere and Sinofibers Technology

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

The idea behind Guangdong Silvere Sci and Sinofibers Technology 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.