Correlation Between Sinomach Automobile and CICT Mobile

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

Diversification Opportunities for Sinomach Automobile and CICT Mobile

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Sinomach and CICT is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Sinomach Automobile Co and CICT Mobile Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CICT Mobile Communication 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 CICT Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CICT Mobile Communication has no effect on the direction of Sinomach Automobile i.e., Sinomach Automobile and CICT Mobile go up and down completely randomly.

Pair Corralation between Sinomach Automobile and CICT Mobile

Assuming the 90 days trading horizon Sinomach Automobile is expected to generate 1.28 times less return on investment than CICT Mobile. But when comparing it to its historical volatility, Sinomach Automobile Co is 1.23 times less risky than CICT Mobile. It trades about 0.15 of its potential returns per unit of risk. CICT Mobile Communication is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  500.00  in CICT Mobile Communication on September 9, 2024 and sell it today you would earn a total of  158.00  from holding CICT Mobile Communication or generate 31.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Sinomach Automobile Co  vs.  CICT Mobile Communication

 Performance 
       Timeline  
Sinomach Automobile 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Sinomach Automobile Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sinomach Automobile sustained solid returns over the last few months and may actually be approaching a breakup point.
CICT Mobile Communication 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in CICT Mobile Communication are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CICT Mobile sustained solid returns over the last few months and may actually be approaching a breakup point.

Sinomach Automobile and CICT Mobile Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sinomach Automobile and CICT Mobile

The main advantage of trading using opposite Sinomach Automobile and CICT Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinomach Automobile position performs unexpectedly, CICT Mobile 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 CICT Mobile will offset losses from the drop in CICT Mobile's long position.
The idea behind Sinomach Automobile Co and CICT Mobile Communication 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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