Correlation Between Sinofibers Technology and JuneYao Dairy

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

Diversification Opportunities for Sinofibers Technology and JuneYao Dairy

-0.37

Correlation Coefficient

Sinofibers Technology  JuneYao Dairy

Very good diversification

The 3 months correlation between Sinofibers and JuneYao is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sinofibers Technology Co and JuneYao Dairy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JuneYao Dairy 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 JuneYao Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JuneYao Dairy has no effect on the direction of Sinofibers Technology i.e., Sinofibers Technology and JuneYao Dairy go up and down completely randomly.

Pair Corralation between Sinofibers Technology and JuneYao Dairy

Assuming the 90 days trading horizon Sinofibers Technology Co is expected to generate 1.02 times more return on investment than JuneYao Dairy. However, Sinofibers Technology is 1.02 times more volatile than JuneYao Dairy Co. It trades about -0.03 of its potential returns per unit of risk. JuneYao Dairy Co is currently generating about -0.05 per unit of risk. If you would invest  5,639  in Sinofibers Technology Co on October 26, 2024 and sell it today you would lose (2,750) from holding Sinofibers Technology Co or give up 48.77% 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.  JuneYao Dairy Co

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.

JuneYao Dairy

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Sinofibers Technology and JuneYao Dairy

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

The idea behind Sinofibers Technology Co and JuneYao Dairy 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.