Correlation Between SGSG Sciencetechnolog and Hainan Expressway

Can any of the company-specific risk be diversified away by investing in both SGSG Sciencetechnolog and Hainan Expressway 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 SGSG Sciencetechnolog and Hainan Expressway into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SGSG Sciencetechnology Co and Hainan Expressway Co, you can compare the effects of market volatilities on SGSG Sciencetechnolog and Hainan Expressway 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 SGSG Sciencetechnolog with a short position of Hainan Expressway. Check out your portfolio center. Please also check ongoing floating volatility patterns of SGSG Sciencetechnolog and Hainan Expressway.

Diversification Opportunities for SGSG Sciencetechnolog and Hainan Expressway

-0.45

Correlation Coefficient

SGSG Sciencetechnolog  Hainan Expressway

Very good diversification

The 3 months correlation between SGSG and Hainan is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding SGSG Sciencetechnology Co and Hainan Expressway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hainan Expressway and SGSG Sciencetechnolog 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 SGSG Sciencetechnology Co are associated (or correlated) with Hainan Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hainan Expressway has no effect on the direction of SGSG Sciencetechnolog i.e., SGSG Sciencetechnolog and Hainan Expressway go up and down completely randomly.

Pair Corralation between SGSG Sciencetechnolog and Hainan Expressway

Assuming the 90 days trading horizon SGSG Sciencetechnology Co is expected to generate 1.72 times more return on investment than Hainan Expressway. However, SGSG Sciencetechnolog is 1.72 times more volatile than Hainan Expressway Co. It trades about 0.02 of its potential returns per unit of risk. Hainan Expressway Co is currently generating about 0.02 per unit of risk. If you would invest  4,559  in SGSG Sciencetechnology Co on December 25, 2024 and sell it today you would lose (127.00) from holding SGSG Sciencetechnology Co or give up 2.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

SGSG Sciencetechnology Co  vs.  Hainan Expressway Co

SGSG Sciencetechnology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SGSG Sciencetechnology Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SGSG Sciencetechnolog may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Hainan Expressway

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hainan Expressway Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hainan Expressway is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SGSG Sciencetechnolog and Hainan Expressway

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

The idea behind SGSG Sciencetechnology Co and Hainan Expressway 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.