Correlation Between Dalian Thermal and SIASUN Robot

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

By analyzing existing cross correlation between Dalian Thermal Power and SIASUN Robot Automation, you can compare the effects of market volatilities on Dalian Thermal and SIASUN Robot 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 Dalian Thermal with a short position of SIASUN Robot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dalian Thermal and SIASUN Robot.

Diversification Opportunities for Dalian Thermal and SIASUN Robot

0.74

Correlation Coefficient

Dalian Thermal  SIASUN Robot

Poor diversification

The 3 months correlation between Dalian and SIASUN is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dalian Thermal Power and SIASUN Robot Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIASUN Robot Automation and Dalian Thermal 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 Dalian Thermal Power are associated (or correlated) with SIASUN Robot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIASUN Robot Automation has no effect on the direction of Dalian Thermal i.e., Dalian Thermal and SIASUN Robot go up and down completely randomly.

Pair Corralation between Dalian Thermal and SIASUN Robot

Assuming the 90 days trading horizon Dalian Thermal is expected to generate 1.46 times less return on investment than SIASUN Robot. In addition to that, Dalian Thermal is 1.03 times more volatile than SIASUN Robot Automation. It trades about 0.04 of its total potential returns per unit of risk. SIASUN Robot Automation is currently generating about 0.06 per unit of volatility. If you would invest  914.00  in SIASUN Robot Automation on October 4, 2024 and sell it today you would earn a total of  881.00  from holding SIASUN Robot Automation or generate 96.39% return on investment over 90 days.

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

Dalian Thermal Power  vs.  SIASUN Robot Automation

Dalian Thermal Power

Risk-Adjusted Performance

0 of 100

Very Weak

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

SIASUN Robot Automation

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SIASUN Robot Automation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SIASUN Robot sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dalian Thermal and SIASUN Robot

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

The idea behind Dalian Thermal Power and SIASUN Robot Automation 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.