Correlation Between Sino AG and NORTHERN OCEAN

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

By analyzing existing cross correlation between Sino AG and NORTHERN OCEAN LTD, you can compare the effects of market volatilities on Sino AG and NORTHERN OCEAN 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 Sino AG with a short position of NORTHERN OCEAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino AG and NORTHERN OCEAN.

Diversification Opportunities for Sino AG and NORTHERN OCEAN

-0.49

Correlation Coefficient

Sino AG  NORTHERN OCEAN

Very good diversification

The 3 months correlation between Sino and NORTHERN is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sino AG and NORTHERN OCEAN LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHERN OCEAN LTD and Sino AG 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 Sino AG are associated (or correlated) with NORTHERN OCEAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHERN OCEAN LTD has no effect on the direction of Sino AG i.e., Sino AG and NORTHERN OCEAN go up and down completely randomly.

Pair Corralation between Sino AG and NORTHERN OCEAN

Assuming the 90 days horizon Sino AG is expected to generate 1.06 times more return on investment than NORTHERN OCEAN. However, Sino AG is 1.06 times more volatile than NORTHERN OCEAN LTD. It trades about 0.25 of its potential returns per unit of risk. NORTHERN OCEAN LTD is currently generating about -0.02 per unit of risk. If you would invest  6,450  in Sino AG on December 29, 2024 and sell it today you would earn a total of  2,950  from holding Sino AG or generate 45.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sino AG  vs.  NORTHERN OCEAN LTD

Sino AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sino AG are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Sino AG reported solid returns over the last few months and may actually be approaching a breakup point.

NORTHERN OCEAN LTD

Risk-Adjusted Performance

Very Weak

Over the last 90 days NORTHERN OCEAN LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NORTHERN OCEAN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sino AG and NORTHERN OCEAN

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

The idea behind Sino AG and NORTHERN OCEAN LTD 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.