Correlation Between Saurer Intelligent and Sinocat Environmental

Can any of the company-specific risk be diversified away by investing in both Saurer Intelligent and Sinocat Environmental 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 Saurer Intelligent and Sinocat Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Saurer Intelligent Technology and Sinocat Environmental Technology, you can compare the effects of market volatilities on Saurer Intelligent and Sinocat Environmental 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 Saurer Intelligent with a short position of Sinocat Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saurer Intelligent and Sinocat Environmental.

Diversification Opportunities for Saurer Intelligent and Sinocat Environmental

0.88

Correlation Coefficient

Saurer Intelligent  Sinocat Environmental

Very poor diversification

The 3 months correlation between Saurer and Sinocat is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Saurer Intelligent Technology and Sinocat Environmental Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinocat Environmental and Saurer Intelligent 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 Saurer Intelligent Technology are associated (or correlated) with Sinocat Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinocat Environmental has no effect on the direction of Saurer Intelligent i.e., Saurer Intelligent and Sinocat Environmental go up and down completely randomly.

Pair Corralation between Saurer Intelligent and Sinocat Environmental

Assuming the 90 days trading horizon Saurer Intelligent Technology is expected to generate 0.93 times more return on investment than Sinocat Environmental. However, Saurer Intelligent Technology is 1.08 times less risky than Sinocat Environmental. It trades about 0.25 of its potential returns per unit of risk. Sinocat Environmental Technology is currently generating about 0.19 per unit of risk. If you would invest  135.00  in Saurer Intelligent Technology on September 4, 2024 and sell it today you would earn a total of  92.00  from holding Saurer Intelligent Technology or generate 68.15% return on investment over 90 days.

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

Saurer Intelligent Technology  vs.  Sinocat Environmental Technolo

Saurer Intelligent

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Saurer Intelligent Technology are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Saurer Intelligent sustained solid returns over the last few months and may actually be approaching a breakup point.

Sinocat Environmental

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sinocat Environmental Technology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sinocat Environmental sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Saurer Intelligent and Sinocat Environmental

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

The idea behind Saurer Intelligent Technology and Sinocat Environmental Technology 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.