Correlation Between Sinofibers Technology and Gifore Agricultural

Can any of the company-specific risk be diversified away by investing in both Sinofibers Technology and Gifore Agricultural 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 Sinofibers Technology and Gifore Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sinofibers Technology Co and Gifore Agricultural Machinery, you can compare the effects of market volatilities on Sinofibers Technology and Gifore Agricultural 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 Sinofibers Technology with a short position of Gifore Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinofibers Technology and Gifore Agricultural.

Diversification Opportunities for Sinofibers Technology and Gifore Agricultural

-0.03

Correlation Coefficient

Sinofibers Technology  Gifore Agricultural

Good diversification

The 3 months correlation between Sinofibers and Gifore is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Sinofibers Technology Co and Gifore Agricultural Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gifore Agricultural and Sinofibers Technology 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 Sinofibers Technology Co are associated (or correlated) with Gifore Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gifore Agricultural has no effect on the direction of Sinofibers Technology i.e., Sinofibers Technology and Gifore Agricultural go up and down completely randomly.

Pair Corralation between Sinofibers Technology and Gifore Agricultural

Assuming the 90 days trading horizon Sinofibers Technology Co is expected to generate 0.59 times more return on investment than Gifore Agricultural. However, Sinofibers Technology Co is 1.68 times less risky than Gifore Agricultural. It trades about -0.05 of its potential returns per unit of risk. Gifore Agricultural Machinery is currently generating about -0.19 per unit of risk. If you would invest  2,762  in Sinofibers Technology Co on October 12, 2024 and sell it today you would lose (82.00) from holding Sinofibers Technology Co or give up 2.97% of portfolio value over 90 days.

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

Sinofibers Technology Co  vs.  Gifore Agricultural Machinery

Sinofibers Technology

Risk-Adjusted Performance

1 of 100

Weak

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

Gifore Agricultural

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gifore Agricultural Machinery are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gifore Agricultural may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sinofibers Technology and Gifore Agricultural

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

The idea behind Sinofibers Technology Co and Gifore Agricultural Machinery 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.