Correlation Between Sublime China and Markor International

Can any of the company-specific risk be diversified away by investing in both Sublime China and Markor International 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 Sublime China and Markor International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sublime China Information and Markor International Home, you can compare the effects of market volatilities on Sublime China and Markor International 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 Sublime China with a short position of Markor International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sublime China and Markor International.

Diversification Opportunities for Sublime China and Markor International

0.51

Correlation Coefficient

Sublime China  Markor International

Very weak diversification

The 3 months correlation between Sublime and Markor is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sublime China Information and Markor International Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markor International Home and Sublime China 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 Sublime China Information are associated (or correlated) with Markor International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Markor International Home has no effect on the direction of Sublime China i.e., Sublime China and Markor International go up and down completely randomly.

Pair Corralation between Sublime China and Markor International

Assuming the 90 days trading horizon Sublime China Information is expected to generate 0.9 times more return on investment than Markor International. However, Sublime China Information is 1.11 times less risky than Markor International. It trades about 0.07 of its potential returns per unit of risk. Markor International Home is currently generating about -0.07 per unit of risk. If you would invest  5,618  in Sublime China Information on October 7, 2024 and sell it today you would earn a total of  550.00  from holding Sublime China Information or generate 9.79% return on investment over 90 days.

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

Sublime China Information  vs.  Markor International Home

Sublime China Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sublime China Information 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.

Markor International Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Markor International Home has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Markor International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sublime China and Markor International

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

The idea behind Sublime China Information and Markor International Home 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.