Correlation Between Sino AG and GANGLONG CHINA

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

By analyzing existing cross correlation between Sino AG and GANGLONG CHINA PRGRLTD, you can compare the effects of market volatilities on Sino AG and GANGLONG CHINA 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 GANGLONG CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino AG and GANGLONG CHINA.

Diversification Opportunities for Sino AG and GANGLONG CHINA

-0.6

Correlation Coefficient

Sino AG  GANGLONG CHINA

Excellent diversification

The 3 months correlation between Sino and GANGLONG is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sino AG and GANGLONG CHINA PRGRLTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GANGLONG CHINA PRGRLTD 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 GANGLONG CHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GANGLONG CHINA PRGRLTD has no effect on the direction of Sino AG i.e., Sino AG and GANGLONG CHINA go up and down completely randomly.

Pair Corralation between Sino AG and GANGLONG CHINA

Assuming the 90 days horizon Sino AG is expected to generate 23.24 times less return on investment than GANGLONG CHINA. But when comparing it to its historical volatility, Sino AG is 29.62 times less risky than GANGLONG CHINA. It trades about 0.09 of its potential returns per unit of risk. GANGLONG CHINA PRGRLTD is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6.65  in GANGLONG CHINA PRGRLTD on October 5, 2024 and sell it today you would lose (5.85) from holding GANGLONG CHINA PRGRLTD or give up 87.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Sino AG  vs.  GANGLONG CHINA PRGRLTD

Sino AG

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Sino AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Sino AG reported solid returns over the last few months and may actually be approaching a breakup point.

GANGLONG CHINA PRGRLTD

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GANGLONG CHINA PRGRLTD are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GANGLONG CHINA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sino AG and GANGLONG CHINA

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

The idea behind Sino AG and GANGLONG CHINA PRGRLTD 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.