Correlation Between Sinbon Electronics and First Steamship

Can any of the company-specific risk be diversified away by investing in both Sinbon Electronics and First Steamship 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 Sinbon Electronics and First Steamship into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sinbon Electronics Co and First Steamship Co, you can compare the effects of market volatilities on Sinbon Electronics and First Steamship 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 Sinbon Electronics with a short position of First Steamship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinbon Electronics and First Steamship.

Diversification Opportunities for Sinbon Electronics and First Steamship

0.55

Correlation Coefficient

Sinbon Electronics  First Steamship

Very weak diversification

The 3 months correlation between Sinbon and First is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sinbon Electronics Co and First Steamship Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Steamship and Sinbon Electronics 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 Sinbon Electronics Co are associated (or correlated) with First Steamship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Steamship has no effect on the direction of Sinbon Electronics i.e., Sinbon Electronics and First Steamship go up and down completely randomly.

Pair Corralation between Sinbon Electronics and First Steamship

Assuming the 90 days trading horizon Sinbon Electronics Co is expected to generate 1.58 times more return on investment than First Steamship. However, Sinbon Electronics is 1.58 times more volatile than First Steamship Co. It trades about -0.04 of its potential returns per unit of risk. First Steamship Co is currently generating about -0.2 per unit of risk. If you would invest  29,100  in Sinbon Electronics Co on October 10, 2024 and sell it today you would lose (1,550) from holding Sinbon Electronics Co or give up 5.33% of portfolio value over 90 days.

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

Sinbon Electronics Co  vs.  First Steamship Co

Sinbon Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinbon Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sinbon Electronics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

First Steamship

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Steamship Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Sinbon Electronics and First Steamship

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

The idea behind Sinbon Electronics Co and First Steamship 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.