Correlation Between Porton Fine and Sinosun Tech

Can any of the company-specific risk be diversified away by investing in both Porton Fine and Sinosun Tech 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 Porton Fine and Sinosun Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Porton Fine Chemicals and Sinosun Tech, you can compare the effects of market volatilities on Porton Fine and Sinosun Tech 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 Porton Fine with a short position of Sinosun Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Porton Fine and Sinosun Tech.

Diversification Opportunities for Porton Fine and Sinosun Tech

-0.12

Correlation Coefficient

Porton Fine  Sinosun Tech

Good diversification

The 3 months correlation between Porton and Sinosun is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Porton Fine Chemicals and Sinosun Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinosun Tech and Porton Fine 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 Porton Fine Chemicals are associated (or correlated) with Sinosun Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinosun Tech has no effect on the direction of Porton Fine i.e., Porton Fine and Sinosun Tech go up and down completely randomly.

Pair Corralation between Porton Fine and Sinosun Tech

Assuming the 90 days trading horizon Porton Fine Chemicals is expected to under-perform the Sinosun Tech. But the stock apears to be less risky and, when comparing its historical volatility, Porton Fine Chemicals is 1.69 times less risky than Sinosun Tech. The stock trades about -0.02 of its potential returns per unit of risk. The Sinosun Tech is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  718.00  in Sinosun Tech on October 10, 2024 and sell it today you would earn a total of  901.00  from holding Sinosun Tech or generate 125.49% return on investment over 90 days.

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

Porton Fine Chemicals  vs.  Sinosun Tech

Porton Fine Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sinosun Tech

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sinosun Tech are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sinosun Tech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Porton Fine and Sinosun Tech

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

The idea behind Porton Fine Chemicals and Sinosun Tech 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.