Correlation Between China Clean and SFL

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

By analyzing existing cross correlation between China Clean Energy and SFL Corporation, you can compare the effects of market volatilities on China Clean and SFL 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 China Clean with a short position of SFL. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Clean and SFL.

Diversification Opportunities for China Clean and SFL

0.0

Correlation Coefficient

China Clean  SFL

Pay attention - limited upside

The 3 months correlation between China and SFL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Clean Energy and SFL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFL Corporation and China Clean 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 China Clean Energy are associated (or correlated) with SFL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFL Corporation has no effect on the direction of China Clean i.e., China Clean and SFL go up and down completely randomly.

Pair Corralation between China Clean and SFL

If you would invest  0.01  in China Clean Energy on September 21, 2024 and sell it today you would earn a total of  0.00  from holding China Clean Energy or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.73%
Values	Daily Returns

China Clean Energy  vs.  SFL Corp.

China Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, China Clean is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

SFL Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SFL Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with China Clean and SFL

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

The idea behind China Clean Energy and SFL Corporation 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 Global Correlations module to find global opportunities by holding instruments from different markets.