Correlation Between Sinomach Automobile and Western Mining

Can any of the company-specific risk be diversified away by investing in both Sinomach Automobile and Western Mining 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 Sinomach Automobile and Western Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Sinomach Automobile and Western Mining

-0.09

Correlation Coefficient

Sinomach Automobile  Western Mining

Good diversification

The 3 months correlation between Sinomach and Western is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sinomach Automobile Co and Western Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Mining and Sinomach Automobile 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 Sinomach Automobile Co are associated (or correlated) with Western Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Mining has no effect on the direction of Sinomach Automobile i.e., Sinomach Automobile and Western Mining go up and down completely randomly.

Pair Corralation between Sinomach Automobile and Western Mining

Assuming the 90 days trading horizon Sinomach Automobile Co is expected to generate 1.38 times more return on investment than Western Mining. However, Sinomach Automobile is 1.38 times more volatile than Western Mining Co. It trades about -0.06 of its potential returns per unit of risk. Western Mining Co is currently generating about -0.12 per unit of risk. If you would invest  705.00  in Sinomach Automobile Co on October 3, 2024 and sell it today you would lose (82.00) from holding Sinomach Automobile Co or give up 11.63% of portfolio value over 90 days.

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

Sinomach Automobile Co  vs.  Western Mining Co

Sinomach Automobile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinomach Automobile Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Western Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Mining Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sinomach Automobile and Western Mining

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

The idea behind Sinomach Automobile Co and Western Mining 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.