Correlation Between Sany Heavy and Financial Street

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

By analyzing existing cross correlation between Sany Heavy Energy and Financial Street Holdings, you can compare the effects of market volatilities on Sany Heavy and Financial Street 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 Sany Heavy with a short position of Financial Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sany Heavy and Financial Street.

Diversification Opportunities for Sany Heavy and Financial Street

0.73

Correlation Coefficient

Sany Heavy  Financial Street

Poor diversification

The 3 months correlation between Sany and Financial is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sany Heavy Energy and Financial Street Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Street Holdings and Sany Heavy 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 Sany Heavy Energy are associated (or correlated) with Financial Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Street Holdings has no effect on the direction of Sany Heavy i.e., Sany Heavy and Financial Street go up and down completely randomly.

Pair Corralation between Sany Heavy and Financial Street

Assuming the 90 days trading horizon Sany Heavy Energy is expected to generate 0.82 times more return on investment than Financial Street. However, Sany Heavy Energy is 1.23 times less risky than Financial Street. It trades about 0.01 of its potential returns per unit of risk. Financial Street Holdings is currently generating about -0.02 per unit of risk. If you would invest  3,124  in Sany Heavy Energy on October 4, 2024 and sell it today you would lose (36.00) from holding Sany Heavy Energy or give up 1.15% of portfolio value over 90 days.

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

Sany Heavy Energy  vs.  Financial Street Holdings

Sany Heavy Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sany Heavy Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sany Heavy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Financial Street Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Financial Street Holdings 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 Sany Heavy and Financial Street

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

The idea behind Sany Heavy Energy and Financial Street Holdings 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 CEOs Directory module to screen CEOs from public companies around the world.