Correlation Between Nasdaq and Sino AG
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Sino AG 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 Nasdaq and Sino AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Sino AG, you can compare the effects of market volatilities on Nasdaq and Sino AG 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 Nasdaq with a short position of Sino AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Sino AG.
Diversification Opportunities for Nasdaq and Sino AG
Very weak diversification
The 3 months correlation between Nasdaq and Sino is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Sino AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino AG and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Sino AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino AG has no effect on the direction of Nasdaq i.e., Nasdaq and Sino AG go up and down completely randomly.
Pair Corralation between Nasdaq and Sino AG
Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Sino AG. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 2.55 times less risky than Sino AG. The stock trades about -0.25 of its potential returns per unit of risk. The Sino AG is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 6,550 in Sino AG on October 15, 2024 and sell it today you would earn a total of 1,300 from holding Sino AG or generate 19.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 88.89% |
| Values | Daily Returns |
Nasdaq Inc vs. Sino AG
Performance |
| Timeline |
| Nasdaq Inc |
| Sino AG |
Nasdaq and Sino AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Sino AG
The main advantage of trading using opposite Nasdaq and Sino AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Sino AG 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 AG will offset losses from the drop in Sino AG's long position.The idea behind Nasdaq Inc and Sino AG 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.| Ethereum vs. Sino AG | ||
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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Sino AG as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Sino AG's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Sino AG's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Sino AG.
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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