Correlation Between Eurocharm Holdings and Sinbon Electronics

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

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

Diversification Opportunities for Eurocharm Holdings and Sinbon Electronics

-0.54

Correlation Coefficient

Eurocharm Holdings  Sinbon Electronics

Excellent diversification

The 3 months correlation between Eurocharm and Sinbon is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Eurocharm Holdings Co and Sinbon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinbon Electronics and Eurocharm Holdings 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 Eurocharm Holdings Co are associated (or correlated) with Sinbon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinbon Electronics has no effect on the direction of Eurocharm Holdings i.e., Eurocharm Holdings and Sinbon Electronics go up and down completely randomly.

Pair Corralation between Eurocharm Holdings and Sinbon Electronics

Assuming the 90 days trading horizon Eurocharm Holdings Co is expected to under-perform the Sinbon Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Eurocharm Holdings Co is 1.69 times less risky than Sinbon Electronics. The stock trades about -0.18 of its potential returns per unit of risk. The Sinbon Electronics Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  25,900  in Sinbon Electronics Co on December 29, 2024 and sell it today you would earn a total of  600.00  from holding Sinbon Electronics Co or generate 2.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.25%
Values	Daily Returns

Eurocharm Holdings Co  vs.  Sinbon Electronics Co

Eurocharm Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eurocharm Holdings 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Sinbon Electronics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sinbon Electronics Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Eurocharm Holdings and Sinbon Electronics

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

The idea behind Eurocharm Holdings Co and Sinbon Electronics 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.