Correlation Between Silkroad Visual and Bank of Suzhou

Can any of the company-specific risk be diversified away by investing in both Silkroad Visual and Bank of Suzhou 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 Silkroad Visual and Bank of Suzhou into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Silkroad Visual Technology and Bank of Suzhou, you can compare the effects of market volatilities on Silkroad Visual and Bank of Suzhou 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 Silkroad Visual with a short position of Bank of Suzhou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silkroad Visual and Bank of Suzhou.

Diversification Opportunities for Silkroad Visual and Bank of Suzhou

-0.33

Correlation Coefficient

Silkroad Visual  Bank of Suzhou

Very good diversification

The 3 months correlation between Silkroad and Bank is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Silkroad Visual Technology and Bank of Suzhou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Suzhou and Silkroad Visual 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 Silkroad Visual Technology are associated (or correlated) with Bank of Suzhou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Suzhou has no effect on the direction of Silkroad Visual i.e., Silkroad Visual and Bank of Suzhou go up and down completely randomly.

Pair Corralation between Silkroad Visual and Bank of Suzhou

Assuming the 90 days trading horizon Silkroad Visual Technology is expected to generate 2.79 times more return on investment than Bank of Suzhou. However, Silkroad Visual is 2.79 times more volatile than Bank of Suzhou. It trades about 0.01 of its potential returns per unit of risk. Bank of Suzhou is currently generating about -0.01 per unit of risk. If you would invest  1,959  in Silkroad Visual Technology on December 25, 2024 and sell it today you would lose (47.00) from holding Silkroad Visual Technology or give up 2.4% of portfolio value over 90 days.

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

Silkroad Visual Technology  vs.  Bank of Suzhou

Silkroad Visual Tech

Risk-Adjusted Performance

Very Weak

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

Bank of Suzhou

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Silkroad Visual and Bank of Suzhou

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

The idea behind Silkroad Visual Technology and Bank of Suzhou 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.