Correlation Between SICC and Zhejiang Qianjiang

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

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

Diversification Opportunities for SICC and Zhejiang Qianjiang

0.61

Correlation Coefficient

SICC  Zhejiang Qianjiang

Poor diversification

The 3 months correlation between SICC and Zhejiang is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding SICC Co and Zhejiang Qianjiang Motorcycle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Qianjiang and SICC 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 SICC Co are associated (or correlated) with Zhejiang Qianjiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Qianjiang has no effect on the direction of SICC i.e., SICC and Zhejiang Qianjiang go up and down completely randomly.

Pair Corralation between SICC and Zhejiang Qianjiang

Assuming the 90 days trading horizon SICC Co is expected to under-perform the Zhejiang Qianjiang. In addition to that, SICC is 1.11 times more volatile than Zhejiang Qianjiang Motorcycle. It trades about -0.02 of its total potential returns per unit of risk. Zhejiang Qianjiang Motorcycle is currently generating about -0.01 per unit of volatility. If you would invest  2,356  in Zhejiang Qianjiang Motorcycle on October 4, 2024 and sell it today you would lose (586.00) from holding Zhejiang Qianjiang Motorcycle or give up 24.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

SICC Co  vs.  Zhejiang Qianjiang Motorcycle

SICC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SICC Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Zhejiang Qianjiang

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhejiang Qianjiang Motorcycle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with SICC and Zhejiang Qianjiang

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

The idea behind SICC Co and Zhejiang Qianjiang Motorcycle 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.