Correlation Between Trade Van and San Fu

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Can any of the company-specific risk be diversified away by investing in both Trade Van and San Fu 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 Trade Van and San Fu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trade Van Information Services and San Fu Chemical, you can compare the effects of market volatilities on Trade Van and San Fu 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 Trade Van with a short position of San Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trade Van and San Fu.

Diversification Opportunities for Trade Van and San Fu

0.19
  Correlation Coefficient

Average diversification

The 3 months correlation between Trade and San is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Trade Van Information Services and San Fu Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Fu Chemical and Trade Van 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 Trade Van Information Services are associated (or correlated) with San Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Fu Chemical has no effect on the direction of Trade Van i.e., Trade Van and San Fu go up and down completely randomly.

Pair Corralation between Trade Van and San Fu

Assuming the 90 days trading horizon Trade Van Information Services is expected to generate 0.41 times more return on investment than San Fu. However, Trade Van Information Services is 2.44 times less risky than San Fu. It trades about 0.21 of its potential returns per unit of risk. San Fu Chemical is currently generating about 0.03 per unit of risk. If you would invest  7,700  in Trade Van Information Services on October 9, 2024 and sell it today you would earn a total of  1,140  from holding Trade Van Information Services or generate 14.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Trade Van Information Services  vs.  San Fu Chemical

 Performance 
       Timeline  
Trade Van Information 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Trade Van Information Services are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Trade Van showed solid returns over the last few months and may actually be approaching a breakup point.
San Fu Chemical 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in San Fu Chemical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, San Fu is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Trade Van and San Fu Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Trade Van and San Fu

The main advantage of trading using opposite Trade Van and San Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trade Van position performs unexpectedly, San Fu 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 San Fu will offset losses from the drop in San Fu's long position.
The idea behind Trade Van Information Services and San Fu Chemical 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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