Correlation Between China State and Sinomach Automobile
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By analyzing existing cross correlation between China State Construction and Sinomach Automobile Co, you can compare the effects of market volatilities on China State and Sinomach Automobile 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 China State with a short position of Sinomach Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of China State and Sinomach Automobile.
Diversification Opportunities for China State and Sinomach Automobile
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Sinomach is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding China State Construction and Sinomach Automobile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinomach Automobile and China State 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 China State Construction are associated (or correlated) with Sinomach Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinomach Automobile has no effect on the direction of China State i.e., China State and Sinomach Automobile go up and down completely randomly.
Pair Corralation between China State and Sinomach Automobile
Assuming the 90 days trading horizon China State Construction is expected to under-perform the Sinomach Automobile. But the stock apears to be less risky and, when comparing its historical volatility, China State Construction is 1.04 times less risky than Sinomach Automobile. The stock trades about -0.05 of its potential returns per unit of risk. The Sinomach Automobile Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 646.00 in Sinomach Automobile Co on September 6, 2024 and sell it today you would earn a total of 28.00 from holding Sinomach Automobile Co or generate 4.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
China State Construction vs. Sinomach Automobile Co
Performance |
Timeline |
China State Construction |
Sinomach Automobile |
China State and Sinomach Automobile Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China State and Sinomach Automobile
The main advantage of trading using opposite China State and Sinomach Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China State position performs unexpectedly, Sinomach Automobile 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 Sinomach Automobile will offset losses from the drop in Sinomach Automobile's long position.China State vs. China Minmetals Rare | China State vs. Tongyu Communication | China State vs. Dalian Thermal Power | China State vs. Hainan Mining Co |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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