Correlation Between Sinphar Pharmaceutical and Gordon Auto
Can any of the company-specific risk be diversified away by investing in both Sinphar Pharmaceutical and Gordon Auto 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 Sinphar Pharmaceutical and Gordon Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sinphar Pharmaceutical Co and Gordon Auto Body, you can compare the effects of market volatilities on Sinphar Pharmaceutical and Gordon Auto 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 Sinphar Pharmaceutical with a short position of Gordon Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinphar Pharmaceutical and Gordon Auto.
Diversification Opportunities for Sinphar Pharmaceutical and Gordon Auto
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sinphar and Gordon is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sinphar Pharmaceutical Co and Gordon Auto Body in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gordon Auto Body and Sinphar Pharmaceutical 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 Sinphar Pharmaceutical Co are associated (or correlated) with Gordon Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gordon Auto Body has no effect on the direction of Sinphar Pharmaceutical i.e., Sinphar Pharmaceutical and Gordon Auto go up and down completely randomly.
Pair Corralation between Sinphar Pharmaceutical and Gordon Auto
Assuming the 90 days trading horizon Sinphar Pharmaceutical Co is expected to under-perform the Gordon Auto. But the stock apears to be less risky and, when comparing its historical volatility, Sinphar Pharmaceutical Co is 3.37 times less risky than Gordon Auto. The stock trades about -0.13 of its potential returns per unit of risk. The Gordon Auto Body is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3,180 in Gordon Auto Body on September 12, 2024 and sell it today you would earn a total of 755.00 from holding Gordon Auto Body or generate 23.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sinphar Pharmaceutical Co vs. Gordon Auto Body
Performance |
| Timeline |
| Sinphar Pharmaceutical |
| Gordon Auto Body |
Sinphar Pharmaceutical and Gordon Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinphar Pharmaceutical and Gordon Auto
The main advantage of trading using opposite Sinphar Pharmaceutical and Gordon Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinphar Pharmaceutical position performs unexpectedly, Gordon Auto 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 Gordon Auto will offset losses from the drop in Gordon Auto's long position.The idea behind Sinphar Pharmaceutical Co and Gordon Auto Body 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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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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