Correlation Between Sinomach General and Servyou Software

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

By analyzing existing cross correlation between Sinomach General Machinery and Servyou Software Group, you can compare the effects of market volatilities on Sinomach General and Servyou Software 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 General with a short position of Servyou Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinomach General and Servyou Software.

Diversification Opportunities for Sinomach General and Servyou Software

0.65

Correlation Coefficient

Sinomach General  Servyou Software

Poor diversification

The 3 months correlation between Sinomach and Servyou is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sinomach General Machinery and Servyou Software Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Servyou Software and Sinomach General 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 General Machinery are associated (or correlated) with Servyou Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Servyou Software has no effect on the direction of Sinomach General i.e., Sinomach General and Servyou Software go up and down completely randomly.

Pair Corralation between Sinomach General and Servyou Software

Assuming the 90 days trading horizon Sinomach General Machinery is expected to under-perform the Servyou Software. But the stock apears to be less risky and, when comparing its historical volatility, Sinomach General Machinery is 1.22 times less risky than Servyou Software. The stock trades about -0.34 of its potential returns per unit of risk. The Servyou Software Group is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest  3,240  in Servyou Software Group on October 8, 2024 and sell it today you would lose (476.00) from holding Servyou Software Group or give up 14.69% of portfolio value over 90 days.

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

Sinomach General Machinery  vs.  Servyou Software Group

Sinomach General Mac

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinomach General Machinery has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sinomach General is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Servyou Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Servyou Software Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Servyou Software is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sinomach General and Servyou Software

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

The idea behind Sinomach General Machinery and Servyou Software Group 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.