Correlation Between Malion New and Sieyuan Electric

Can any of the company-specific risk be diversified away by investing in both Malion New and Sieyuan Electric 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 Malion New and Sieyuan Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Malion New Materials and Sieyuan Electric Co, you can compare the effects of market volatilities on Malion New and Sieyuan Electric 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 Malion New with a short position of Sieyuan Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malion New and Sieyuan Electric.

Diversification Opportunities for Malion New and Sieyuan Electric

0.26

Correlation Coefficient

Malion New  Sieyuan Electric

Modest diversification

The 3 months correlation between Malion and Sieyuan is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Malion New Materials and Sieyuan Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sieyuan Electric and Malion New 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 Malion New Materials are associated (or correlated) with Sieyuan Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sieyuan Electric has no effect on the direction of Malion New i.e., Malion New and Sieyuan Electric go up and down completely randomly.

Pair Corralation between Malion New and Sieyuan Electric

Assuming the 90 days trading horizon Malion New Materials is expected to under-perform the Sieyuan Electric. In addition to that, Malion New is 2.25 times more volatile than Sieyuan Electric Co. It trades about -0.02 of its total potential returns per unit of risk. Sieyuan Electric Co is currently generating about -0.01 per unit of volatility. If you would invest  7,324  in Sieyuan Electric Co on October 6, 2024 and sell it today you would lose (234.00) from holding Sieyuan Electric Co or give up 3.19% of portfolio value over 90 days.

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

Malion New Materials  vs.  Sieyuan Electric Co

Malion New Materials

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sieyuan Electric

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Malion New and Sieyuan Electric

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

The idea behind Malion New Materials and Sieyuan Electric 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.