Correlation Between Sinotrans and Chengdu Spaceon

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

By analyzing existing cross correlation between Sinotrans Ltd Class and Chengdu Spaceon Electronics, you can compare the effects of market volatilities on Sinotrans and Chengdu Spaceon 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 Sinotrans with a short position of Chengdu Spaceon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinotrans and Chengdu Spaceon.

Diversification Opportunities for Sinotrans and Chengdu Spaceon

0.37

Correlation Coefficient

Sinotrans  Chengdu Spaceon

Weak diversification

The 3 months correlation between Sinotrans and Chengdu is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sinotrans Ltd Class and Chengdu Spaceon Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu Spaceon Elec and Sinotrans 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 Sinotrans Ltd Class are associated (or correlated) with Chengdu Spaceon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu Spaceon Elec has no effect on the direction of Sinotrans i.e., Sinotrans and Chengdu Spaceon go up and down completely randomly.

Pair Corralation between Sinotrans and Chengdu Spaceon

Assuming the 90 days trading horizon Sinotrans Ltd Class is expected to generate 0.54 times more return on investment than Chengdu Spaceon. However, Sinotrans Ltd Class is 1.85 times less risky than Chengdu Spaceon. It trades about 0.05 of its potential returns per unit of risk. Chengdu Spaceon Electronics is currently generating about 0.0 per unit of risk. If you would invest  497.00  in Sinotrans Ltd Class on October 9, 2024 and sell it today you would earn a total of  20.00  from holding Sinotrans Ltd Class or generate 4.02% return on investment over 90 days.

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

Sinotrans Ltd Class  vs.  Chengdu Spaceon Electronics

Sinotrans Class

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sinotrans Ltd Class are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sinotrans is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Chengdu Spaceon Elec

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sinotrans and Chengdu Spaceon

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

The idea behind Sinotrans Ltd Class and Chengdu Spaceon Electronics 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.