Correlation Between Sanan Optoelectronics and Aluminum Corp
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By analyzing existing cross correlation between Sanan Optoelectronics Co and Aluminum Corp of, you can compare the effects of market volatilities on Sanan Optoelectronics and Aluminum Corp 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 Sanan Optoelectronics with a short position of Aluminum Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanan Optoelectronics and Aluminum Corp.
Diversification Opportunities for Sanan Optoelectronics and Aluminum Corp
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sanan and Aluminum is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sanan Optoelectronics Co and Aluminum Corp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminum Corp and Sanan Optoelectronics 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 Sanan Optoelectronics Co are associated (or correlated) with Aluminum Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminum Corp has no effect on the direction of Sanan Optoelectronics i.e., Sanan Optoelectronics and Aluminum Corp go up and down completely randomly.
Pair Corralation between Sanan Optoelectronics and Aluminum Corp
Assuming the 90 days trading horizon Sanan Optoelectronics Co is expected to generate 0.98 times more return on investment than Aluminum Corp. However, Sanan Optoelectronics Co is 1.02 times less risky than Aluminum Corp. It trades about -0.1 of its potential returns per unit of risk. Aluminum Corp of is currently generating about -0.14 per unit of risk. If you would invest 1,286 in Sanan Optoelectronics Co on September 25, 2024 and sell it today you would lose (34.00) from holding Sanan Optoelectronics Co or give up 2.64% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Sanan Optoelectronics Co vs. Aluminum Corp of
Performance |
Timeline |
Sanan Optoelectronics |
Aluminum Corp |
Sanan Optoelectronics and Aluminum Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sanan Optoelectronics and Aluminum Corp
The main advantage of trading using opposite Sanan Optoelectronics and Aluminum Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanan Optoelectronics position performs unexpectedly, Aluminum Corp 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 Aluminum Corp will offset losses from the drop in Aluminum Corp's long position.The idea behind Sanan Optoelectronics Co and Aluminum Corp of 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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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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