Correlation Between Sinocat Environmental and Inly Media

Can any of the company-specific risk be diversified away by investing in both Sinocat Environmental and Inly Media 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 Inly Media 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 Inly Media Co, you can compare the effects of market volatilities on Sinocat Environmental and Inly Media 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 Inly Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinocat Environmental and Inly Media.

Diversification Opportunities for Sinocat Environmental and Inly Media

0.87

Correlation Coefficient

Sinocat Environmental  Inly Media

Very poor diversification

The 3 months correlation between Sinocat and Inly is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Sinocat Environmental Technolo and Inly Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inly Media 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 Inly Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inly Media has no effect on the direction of Sinocat Environmental i.e., Sinocat Environmental and Inly Media go up and down completely randomly.

Pair Corralation between Sinocat Environmental and Inly Media

Assuming the 90 days trading horizon Sinocat Environmental is expected to generate 1.49 times less return on investment than Inly Media. But when comparing it to its historical volatility, Sinocat Environmental Technology is 1.48 times less risky than Inly Media. It trades about 0.25 of its potential returns per unit of risk. Inly Media Co is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,451  in Inly Media Co on September 23, 2024 and sell it today you would earn a total of  484.00  from holding Inly Media Co or generate 33.36% return on investment over 90 days.

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

Sinocat Environmental Technolo  vs.  Inly Media Co

Sinocat Environmental

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sinocat Environmental Technology are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sinocat Environmental sustained solid returns over the last few months and may actually be approaching a breakup point.

Inly Media

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inly Media Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Inly Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sinocat Environmental and Inly Media

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

The idea behind Sinocat Environmental Technology and Inly Media 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.