Correlation Between Sinofibers Technology and Ye Chiu

Can any of the company-specific risk be diversified away by investing in both Sinofibers Technology and Ye Chiu 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 Ye Chiu 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 Ye Chiu Metal, you can compare the effects of market volatilities on Sinofibers Technology and Ye Chiu 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 Ye Chiu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinofibers Technology and Ye Chiu.

Diversification Opportunities for Sinofibers Technology and Ye Chiu

0.45

Correlation Coefficient

Sinofibers Technology  Ye Chiu

Very weak diversification

The 3 months correlation between Sinofibers and 601388 is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sinofibers Technology Co and Ye Chiu Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ye Chiu Metal 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 Ye Chiu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ye Chiu Metal has no effect on the direction of Sinofibers Technology i.e., Sinofibers Technology and Ye Chiu go up and down completely randomly.

Pair Corralation between Sinofibers Technology and Ye Chiu

Assuming the 90 days trading horizon Sinofibers Technology Co is expected to generate 0.86 times more return on investment than Ye Chiu. However, Sinofibers Technology Co is 1.17 times less risky than Ye Chiu. It trades about 0.08 of its potential returns per unit of risk. Ye Chiu Metal is currently generating about -0.19 per unit of risk. If you would invest  2,736  in Sinofibers Technology Co on October 3, 2024 and sell it today you would earn a total of  93.00  from holding Sinofibers Technology Co or generate 3.4% return on investment over 90 days.

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

Sinofibers Technology Co  vs.  Ye Chiu Metal

Sinofibers Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinofibers Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ye Chiu Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ye Chiu Metal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Sinofibers Technology and Ye Chiu

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

The idea behind Sinofibers Technology Co and Ye Chiu Metal 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.