Correlation Between Sinbon Electronics and Innolux Corp

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

Diversification Opportunities for Sinbon Electronics and Innolux Corp

0.2

Correlation Coefficient

Sinbon Electronics  Innolux Corp

Modest diversification

The 3 months correlation between Sinbon and Innolux is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sinbon Electronics Co and Innolux Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innolux Corp 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 Innolux Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innolux Corp has no effect on the direction of Sinbon Electronics i.e., Sinbon Electronics and Innolux Corp go up and down completely randomly.

Pair Corralation between Sinbon Electronics and Innolux Corp

Assuming the 90 days trading horizon Sinbon Electronics Co is expected to generate 1.34 times more return on investment than Innolux Corp. However, Sinbon Electronics is 1.34 times more volatile than Innolux Corp. It trades about 0.12 of its potential returns per unit of risk. Innolux Corp is currently generating about -0.03 per unit of risk. If you would invest  25,900  in Sinbon Electronics Co on December 5, 2024 and sell it today you would earn a total of  3,850  from holding Sinbon Electronics Co or generate 14.86% return on investment over 90 days.

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

Sinbon Electronics Co  vs.  Innolux Corp

Sinbon Electronics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sinbon Electronics Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sinbon Electronics showed solid returns over the last few months and may actually be approaching a breakup point.

Innolux Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Sinbon Electronics and Innolux Corp

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

The idea behind Sinbon Electronics Co and Innolux Corp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..