Correlation Between Giant Manufacturing and Sino American

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Can any of the company-specific risk be diversified away by investing in both Giant Manufacturing and Sino American 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 Giant Manufacturing and Sino American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Giant Manufacturing Co and Sino American Silicon Products, you can compare the effects of market volatilities on Giant Manufacturing and Sino American 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 Giant Manufacturing with a short position of Sino American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Giant Manufacturing and Sino American.

Diversification Opportunities for Giant Manufacturing and Sino American

GiantSinoDiversified AwayGiantSinoDiversified Away100%
0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Giant and Sino is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Giant Manufacturing Co and Sino American Silicon Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino American Silicon and Giant Manufacturing 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 Giant Manufacturing Co are associated (or correlated) with Sino American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino American Silicon has no effect on the direction of Giant Manufacturing i.e., Giant Manufacturing and Sino American go up and down completely randomly.

Pair Corralation between Giant Manufacturing and Sino American

Assuming the 90 days trading horizon Giant Manufacturing Co is expected to under-perform the Sino American. In addition to that, Giant Manufacturing is 1.53 times more volatile than Sino American Silicon Products. It trades about -0.24 of its total potential returns per unit of risk. Sino American Silicon Products is currently generating about -0.24 per unit of volatility. If you would invest  18,600  in Sino American Silicon Products on September 15, 2024 and sell it today you would lose (3,800) from holding Sino American Silicon Products or give up 20.43% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Giant Manufacturing Co  vs.  Sino American Silicon Products

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -30-25-20-15-10-505
JavaScript chart by amCharts 3.21.159921 5483
       Timeline  
Giant Manufacturing 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Giant Manufacturing Co 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec150160170180190200210220230
Sino American Silicon 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sino American Silicon Products 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec140150160170180

Giant Manufacturing and Sino American Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.03-3.02-2.01-0.990.00.781.572.363.15 0.050.100.15
JavaScript chart by amCharts 3.21.159921 5483
       Returns  

Pair Trading with Giant Manufacturing and Sino American

The main advantage of trading using opposite Giant Manufacturing and Sino American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Giant Manufacturing position performs unexpectedly, Sino American 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 Sino American will offset losses from the drop in Sino American's long position.
The idea behind Giant Manufacturing Co and Sino American Silicon Products 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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