Correlation Between Sinofibers Technology and HMTNew Technical

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

Diversification Opportunities for Sinofibers Technology and HMTNew Technical

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Sinofibers and HMTNew is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sinofibers Technology Co and HMTNew Technical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMTNew Technical 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 HMTNew Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMTNew Technical has no effect on the direction of Sinofibers Technology i.e., Sinofibers Technology and HMTNew Technical go up and down completely randomly.

Pair Corralation between Sinofibers Technology and HMTNew Technical

Assuming the 90 days trading horizon Sinofibers Technology is expected to generate 1.1 times less return on investment than HMTNew Technical. In addition to that, Sinofibers Technology is 1.01 times more volatile than HMTNew Technical. It trades about 0.13 of its total potential returns per unit of risk. HMTNew Technical is currently generating about 0.14 per unit of volatility. If you would invest  2,266  in HMTNew Technical on September 6, 2024 and sell it today you would earn a total of  895.00  from holding HMTNew Technical or generate 39.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Sinofibers Technology Co  vs.  HMTNew Technical

 Performance 
       Timeline  
Sinofibers Technology 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Sinofibers Technology Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sinofibers Technology sustained solid returns over the last few months and may actually be approaching a breakup point.
HMTNew Technical 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in HMTNew Technical are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HMTNew Technical sustained solid returns over the last few months and may actually be approaching a breakup point.

Sinofibers Technology and HMTNew Technical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sinofibers Technology and HMTNew Technical

The main advantage of trading using opposite Sinofibers Technology and HMTNew Technical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinofibers Technology position performs unexpectedly, HMTNew Technical 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 HMTNew Technical will offset losses from the drop in HMTNew Technical's long position.
The idea behind Sinofibers Technology Co and HMTNew Technical 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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