Correlation Between Yangmei Chemical and SICC

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

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

Diversification Opportunities for Yangmei Chemical and SICC

0.57

Correlation Coefficient

Yangmei Chemical  SICC

Very weak diversification

The 3 months correlation between Yangmei and SICC is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Yangmei Chemical Co and SICC Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SICC and Yangmei Chemical 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 Yangmei Chemical Co are associated (or correlated) with SICC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SICC has no effect on the direction of Yangmei Chemical i.e., Yangmei Chemical and SICC go up and down completely randomly.

Pair Corralation between Yangmei Chemical and SICC

Assuming the 90 days trading horizon Yangmei Chemical Co is expected to generate 0.77 times more return on investment than SICC. However, Yangmei Chemical Co is 1.3 times less risky than SICC. It trades about 0.16 of its potential returns per unit of risk. SICC Co is currently generating about 0.09 per unit of risk. If you would invest  177.00  in Yangmei Chemical Co on September 21, 2024 and sell it today you would earn a total of  67.00  from holding Yangmei Chemical Co or generate 37.85% return on investment over 90 days.

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

Yangmei Chemical Co  vs.  SICC Co

Yangmei Chemical

Risk-Adjusted Performance

12 of 100

Good

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

SICC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SICC Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SICC sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yangmei Chemical and SICC

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

The idea behind Yangmei Chemical Co and SICC 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..