Correlation Between Sino Platinum and Inspur Software

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

By analyzing existing cross correlation between Sino Platinum Metals Co and Inspur Software Co, you can compare the effects of market volatilities on Sino Platinum and Inspur 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 Sino Platinum with a short position of Inspur Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino Platinum and Inspur Software.

Diversification Opportunities for Sino Platinum and Inspur Software

0.68

Correlation Coefficient

Sino Platinum  Inspur Software

Poor diversification

The 3 months correlation between Sino and Inspur is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sino Platinum Metals Co and Inspur Software Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspur Software and Sino Platinum 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 Sino Platinum Metals Co are associated (or correlated) with Inspur Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspur Software has no effect on the direction of Sino Platinum i.e., Sino Platinum and Inspur Software go up and down completely randomly.

Pair Corralation between Sino Platinum and Inspur Software

Assuming the 90 days trading horizon Sino Platinum is expected to generate 77.0 times less return on investment than Inspur Software. But when comparing it to its historical volatility, Sino Platinum Metals Co is 1.58 times less risky than Inspur Software. It trades about 0.0 of its potential returns per unit of risk. Inspur Software Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,301  in Inspur Software Co on October 7, 2024 and sell it today you would earn a total of  22.00  from holding Inspur Software Co or generate 1.69% return on investment over 90 days.

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

Sino Platinum Metals Co  vs.  Inspur Software Co

Sino Platinum Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sino Platinum Metals 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.

Inspur Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inspur Software 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.

Pair Trading with Sino Platinum and Inspur Software

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

The idea behind Sino Platinum Metals Co and Inspur Software 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.