Correlation Between Sinbon Electronics and Chinese Maritime

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

Diversification Opportunities for Sinbon Electronics and Chinese Maritime

0.19

Correlation Coefficient

Sinbon Electronics  Chinese Maritime

Average diversification

The 3 months correlation between Sinbon and Chinese is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sinbon Electronics Co and Chinese Maritime Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chinese Maritime Tra 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 Chinese Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chinese Maritime Tra has no effect on the direction of Sinbon Electronics i.e., Sinbon Electronics and Chinese Maritime go up and down completely randomly.

Pair Corralation between Sinbon Electronics and Chinese Maritime

Assuming the 90 days trading horizon Sinbon Electronics Co is expected to generate 1.48 times more return on investment than Chinese Maritime. However, Sinbon Electronics is 1.48 times more volatile than Chinese Maritime Transport. It trades about -0.04 of its potential returns per unit of risk. Chinese Maritime Transport is currently generating about -0.11 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sinbon Electronics Co  vs.  Chinese Maritime Transport

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 current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chinese Maritime Tra

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chinese Maritime Transport has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Sinbon Electronics and Chinese Maritime

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

The idea behind Sinbon Electronics Co and Chinese Maritime Transport 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 Transaction History module to view history of all your transactions and understand their impact on performance.