Correlation Between Song Hong and Atesco Industrial

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

By analyzing existing cross correlation between Song Hong Garment and Atesco Industrial Cartering, you can compare the effects of market volatilities on Song Hong and Atesco Industrial 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 Song Hong with a short position of Atesco Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Song Hong and Atesco Industrial.

Diversification Opportunities for Song Hong and Atesco Industrial

-0.54

Correlation Coefficient

Song Hong  Atesco Industrial

Excellent diversification

The 3 months correlation between Song and Atesco is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Song Hong Garment and Atesco Industrial Cartering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atesco Industrial and Song Hong 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 Song Hong Garment are associated (or correlated) with Atesco Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atesco Industrial has no effect on the direction of Song Hong i.e., Song Hong and Atesco Industrial go up and down completely randomly.

Pair Corralation between Song Hong and Atesco Industrial

Assuming the 90 days trading horizon Song Hong Garment is expected to generate 0.26 times more return on investment than Atesco Industrial. However, Song Hong Garment is 3.86 times less risky than Atesco Industrial. It trades about 0.15 of its potential returns per unit of risk. Atesco Industrial Cartering is currently generating about -0.06 per unit of risk. If you would invest  4,462,543  in Song Hong Garment on September 13, 2024 and sell it today you would earn a total of  807,457  from holding Song Hong Garment or generate 18.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	63.08%
Values	Daily Returns

Song Hong Garment  vs.  Atesco Industrial Cartering

Song Hong Garment

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Song Hong Garment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical indicators, Song Hong displayed solid returns over the last few months and may actually be approaching a breakup point.

Atesco Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atesco Industrial Cartering has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Song Hong and Atesco Industrial

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

The idea behind Song Hong Garment and Atesco Industrial Cartering 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.