Correlation Between ShuYu Civilian and Sinomach Automobile

Can any of the company-specific risk be diversified away by investing in both ShuYu Civilian and Sinomach Automobile 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 ShuYu Civilian and Sinomach Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ShuYu Civilian Pharmacy and Sinomach Automobile Co, you can compare the effects of market volatilities on ShuYu Civilian and Sinomach Automobile 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 ShuYu Civilian with a short position of Sinomach Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of ShuYu Civilian and Sinomach Automobile.

Diversification Opportunities for ShuYu Civilian and Sinomach Automobile

0.64

Correlation Coefficient

ShuYu Civilian  Sinomach Automobile

Poor diversification

The 3 months correlation between ShuYu and Sinomach is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ShuYu Civilian Pharmacy and Sinomach Automobile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinomach Automobile and ShuYu Civilian 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 ShuYu Civilian Pharmacy are associated (or correlated) with Sinomach Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinomach Automobile has no effect on the direction of ShuYu Civilian i.e., ShuYu Civilian and Sinomach Automobile go up and down completely randomly.

Pair Corralation between ShuYu Civilian and Sinomach Automobile

Assuming the 90 days trading horizon ShuYu Civilian Pharmacy is expected to under-perform the Sinomach Automobile. In addition to that, ShuYu Civilian is 1.68 times more volatile than Sinomach Automobile Co. It trades about -0.04 of its total potential returns per unit of risk. Sinomach Automobile Co is currently generating about 0.04 per unit of volatility. If you would invest  650.00  in Sinomach Automobile Co on December 25, 2024 and sell it today you would earn a total of  18.00  from holding Sinomach Automobile Co or generate 2.77% return on investment over 90 days.

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

ShuYu Civilian Pharmacy  vs.  Sinomach Automobile Co

ShuYu Civilian Pharmacy

Risk-Adjusted Performance

Very Weak

Over the last 90 days ShuYu Civilian Pharmacy 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.

Sinomach Automobile

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sinomach Automobile Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sinomach Automobile is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ShuYu Civilian and Sinomach Automobile

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

The idea behind ShuYu Civilian Pharmacy and Sinomach Automobile 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.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.