Correlation Between Sincere Navigation and Long Bon
Can any of the company-specific risk be diversified away by investing in both Sincere Navigation and Long Bon 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 Sincere Navigation and Long Bon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sincere Navigation Corp and Long Bon International, you can compare the effects of market volatilities on Sincere Navigation and Long Bon 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 Sincere Navigation with a short position of Long Bon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sincere Navigation and Long Bon.
Diversification Opportunities for Sincere Navigation and Long Bon
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sincere and Long is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sincere Navigation Corp and Long Bon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Bon International and Sincere Navigation 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 Sincere Navigation Corp are associated (or correlated) with Long Bon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Bon International has no effect on the direction of Sincere Navigation i.e., Sincere Navigation and Long Bon go up and down completely randomly.
Pair Corralation between Sincere Navigation and Long Bon
Assuming the 90 days trading horizon Sincere Navigation Corp is expected to under-perform the Long Bon. In addition to that, Sincere Navigation is 1.43 times more volatile than Long Bon International. It trades about -0.35 of its total potential returns per unit of risk. Long Bon International is currently generating about -0.34 per unit of volatility. If you would invest 2,130 in Long Bon International on September 23, 2024 and sell it today you would lose (155.00) from holding Long Bon International or give up 7.28% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Sincere Navigation Corp vs. Long Bon International
Performance |
Timeline |
Sincere Navigation Corp |
Long Bon International |
Sincere Navigation and Long Bon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sincere Navigation and Long Bon
The main advantage of trading using opposite Sincere Navigation and Long Bon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sincere Navigation position performs unexpectedly, Long Bon 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 Long Bon will offset losses from the drop in Long Bon's long position.Sincere Navigation vs. Yang Ming Marine | Sincere Navigation vs. Evergreen Marine Corp | Sincere Navigation vs. Eva Airways Corp | Sincere Navigation vs. U Ming Marine Transport |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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