Correlation Between RoadMain T and Sinofibers Technology

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

By analyzing existing cross correlation between RoadMain T Co and Sinofibers Technology Co, you can compare the effects of market volatilities on RoadMain T and Sinofibers Technology 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 RoadMain T with a short position of Sinofibers Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of RoadMain T and Sinofibers Technology.

Diversification Opportunities for RoadMain T and Sinofibers Technology

0.89

Correlation Coefficient

RoadMain T  Sinofibers Technology

Very poor diversification

The 3 months correlation between RoadMain and Sinofibers is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding RoadMain T Co and Sinofibers Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinofibers Technology and RoadMain T 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 RoadMain T Co are associated (or correlated) with Sinofibers Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinofibers Technology has no effect on the direction of RoadMain T i.e., RoadMain T and Sinofibers Technology go up and down completely randomly.

Pair Corralation between RoadMain T and Sinofibers Technology

Assuming the 90 days trading horizon RoadMain T Co is expected to under-perform the Sinofibers Technology. In addition to that, RoadMain T is 1.0 times more volatile than Sinofibers Technology Co. It trades about -0.18 of its total potential returns per unit of risk. Sinofibers Technology Co is currently generating about -0.04 per unit of volatility. If you would invest  3,187  in Sinofibers Technology Co on September 27, 2024 and sell it today you would lose (198.00) from holding Sinofibers Technology Co or give up 6.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.73%
Values	Daily Returns

RoadMain T Co  vs.  Sinofibers Technology Co

RoadMain T

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RoadMain T Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, RoadMain T may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sinofibers Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sinofibers Technology Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sinofibers Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RoadMain T and Sinofibers Technology

The main advantage of trading using opposite RoadMain T and Sinofibers Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RoadMain T position performs unexpectedly, Sinofibers Technology 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 Sinofibers Technology will offset losses from the drop in Sinofibers Technology's long position.

The idea behind RoadMain T Co and Sinofibers Technology Co 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.