Correlation Between Polytronics Technology and Sinbon Electronics

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

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

Diversification Opportunities for Polytronics Technology and Sinbon Electronics

0.05

Correlation Coefficient

Polytronics Technology  Sinbon Electronics

Significant diversification

The 3 months correlation between Polytronics and Sinbon is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Polytronics Technology Corp and Sinbon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinbon Electronics and Polytronics Technology 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 Polytronics Technology Corp are associated (or correlated) with Sinbon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinbon Electronics has no effect on the direction of Polytronics Technology i.e., Polytronics Technology and Sinbon Electronics go up and down completely randomly.

Pair Corralation between Polytronics Technology and Sinbon Electronics

Assuming the 90 days trading horizon Polytronics Technology is expected to generate 4.09 times less return on investment than Sinbon Electronics. But when comparing it to its historical volatility, Polytronics Technology Corp is 2.19 times less risky than Sinbon Electronics. It trades about 0.13 of its potential returns per unit of risk. Sinbon Electronics Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  25,900  in Sinbon Electronics Co on December 5, 2024 and sell it today you would earn a total of  3,850  from holding Sinbon Electronics Co or generate 14.86% return on investment over 90 days.

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

Polytronics Technology Corp  vs.  Sinbon Electronics Co

Polytronics Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polytronics Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Sinbon Electronics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sinbon Electronics Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sinbon Electronics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Polytronics Technology and Sinbon Electronics

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

The idea behind Polytronics Technology Corp and Sinbon Electronics 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.