Correlation Between SI TECH and Chengdu B

Can any of the company-specific risk be diversified away by investing in both SI TECH and Chengdu B 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 SI TECH and Chengdu B into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SI TECH Information Technology and Chengdu B ray Media, you can compare the effects of market volatilities on SI TECH and Chengdu B 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 SI TECH with a short position of Chengdu B. Check out your portfolio center. Please also check ongoing floating volatility patterns of SI TECH and Chengdu B.

Diversification Opportunities for SI TECH and Chengdu B

0.56

Correlation Coefficient

SI TECH  Chengdu B

Very weak diversification

The 3 months correlation between 300608 and Chengdu is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SI TECH Information Technology and Chengdu B ray Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu B ray and SI TECH 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 SI TECH Information Technology are associated (or correlated) with Chengdu B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu B ray has no effect on the direction of SI TECH i.e., SI TECH and Chengdu B go up and down completely randomly.

Pair Corralation between SI TECH and Chengdu B

Assuming the 90 days trading horizon SI TECH is expected to generate 1.47 times less return on investment than Chengdu B. In addition to that, SI TECH is 1.4 times more volatile than Chengdu B ray Media. It trades about 0.12 of its total potential returns per unit of risk. Chengdu B ray Media is currently generating about 0.25 per unit of volatility. If you would invest  369.00  in Chengdu B ray Media on September 21, 2024 and sell it today you would earn a total of  281.00  from holding Chengdu B ray Media or generate 76.15% return on investment over 90 days.

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

SI TECH Information Technology  vs.  Chengdu B ray Media

SI TECH Information

Risk-Adjusted Performance

9 of 100

OK

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

Chengdu B ray

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chengdu B ray Media are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chengdu B sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SI TECH and Chengdu B

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

The idea behind SI TECH Information Technology and Chengdu B ray Media 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.