Correlation Between Sinocat Environmental and Guizhou BroadcastingTV

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

By analyzing existing cross correlation between Sinocat Environmental Technology and Guizhou BroadcastingTV Info, you can compare the effects of market volatilities on Sinocat Environmental and Guizhou BroadcastingTV 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 Sinocat Environmental with a short position of Guizhou BroadcastingTV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinocat Environmental and Guizhou BroadcastingTV.

Diversification Opportunities for Sinocat Environmental and Guizhou BroadcastingTV

0.52

Correlation Coefficient

Sinocat Environmental  Guizhou BroadcastingTV

Very weak diversification

The 3 months correlation between Sinocat and Guizhou is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sinocat Environmental Technolo and Guizhou BroadcastingTV Info in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guizhou BroadcastingTV and Sinocat Environmental 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 Sinocat Environmental Technology are associated (or correlated) with Guizhou BroadcastingTV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guizhou BroadcastingTV has no effect on the direction of Sinocat Environmental i.e., Sinocat Environmental and Guizhou BroadcastingTV go up and down completely randomly.

Pair Corralation between Sinocat Environmental and Guizhou BroadcastingTV

Assuming the 90 days trading horizon Sinocat Environmental Technology is expected to under-perform the Guizhou BroadcastingTV. In addition to that, Sinocat Environmental is 1.64 times more volatile than Guizhou BroadcastingTV Info. It trades about -0.14 of its total potential returns per unit of risk. Guizhou BroadcastingTV Info is currently generating about -0.22 per unit of volatility. If you would invest  982.00  in Guizhou BroadcastingTV Info on October 4, 2024 and sell it today you would lose (127.00) from holding Guizhou BroadcastingTV Info or give up 12.93% of portfolio value over 90 days.

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

Sinocat Environmental Technolo  vs.  Guizhou BroadcastingTV Info

Sinocat Environmental

Risk-Adjusted Performance

1 of 100

Weak

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

Guizhou BroadcastingTV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guizhou BroadcastingTV Info 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 Sinocat Environmental and Guizhou BroadcastingTV

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

The idea behind Sinocat Environmental Technology and Guizhou BroadcastingTV Info 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.