Correlation Between Sinotrans and Markor International

Can any of the company-specific risk be diversified away by investing in both Sinotrans and Markor International 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 Markor International 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 Markor International Home, you can compare the effects of market volatilities on Sinotrans and Markor International 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 Markor International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinotrans and Markor International.

Diversification Opportunities for Sinotrans and Markor International

0.19

Correlation Coefficient

Sinotrans  Markor International

Average diversification

The 3 months correlation between Sinotrans and Markor is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sinotrans Ltd Class and Markor International Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markor International Home 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 Markor International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Markor International Home has no effect on the direction of Sinotrans i.e., Sinotrans and Markor International go up and down completely randomly.

Pair Corralation between Sinotrans and Markor International

Assuming the 90 days trading horizon Sinotrans Ltd Class is expected to under-perform the Markor International. But the stock apears to be less risky and, when comparing its historical volatility, Sinotrans Ltd Class is 2.21 times less risky than Markor International. The stock trades about -0.02 of its potential returns per unit of risk. The Markor International Home is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  187.00  in Markor International Home on October 5, 2024 and sell it today you would lose (3.00) from holding Markor International Home or give up 1.6% of portfolio value over 90 days.

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

Sinotrans Ltd Class  vs.  Markor International Home

Sinotrans Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinotrans Ltd Class has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Markor International Home

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Markor International Home are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Markor International 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 Markor International

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

The idea behind Sinotrans Ltd Class and Markor International Home 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.