Correlation Between Sinbon Electronics and Globe Union

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

Diversification Opportunities for Sinbon Electronics and Globe Union

0.58

Correlation Coefficient

Sinbon Electronics  Globe Union

Very weak diversification

The 3 months correlation between Sinbon and Globe is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sinbon Electronics Co and Globe Union Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Union Industrial 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 Globe Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Union Industrial has no effect on the direction of Sinbon Electronics i.e., Sinbon Electronics and Globe Union go up and down completely randomly.

Pair Corralation between Sinbon Electronics and Globe Union

Assuming the 90 days trading horizon Sinbon Electronics Co is expected to generate 1.72 times more return on investment than Globe Union. However, Sinbon Electronics is 1.72 times more volatile than Globe Union Industrial. It trades about 0.07 of its potential returns per unit of risk. Globe Union Industrial is currently generating about -0.02 per unit of risk. If you would invest  26,000  in Sinbon Electronics Co on December 21, 2024 and sell it today you would earn a total of  2,000  from holding Sinbon Electronics Co or generate 7.69% return on investment over 90 days.

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

Sinbon Electronics Co  vs.  Globe Union Industrial

Sinbon Electronics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sinbon Electronics Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sinbon Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Globe Union Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globe Union Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Globe Union 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 Globe Union

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

The idea behind Sinbon Electronics Co and Globe Union Industrial 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.