Correlation Between San Fu and China General
Can any of the company-specific risk be diversified away by investing in both San Fu and China General 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 San Fu and China General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between San Fu Chemical and China General Plastics, you can compare the effects of market volatilities on San Fu and China General 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 San Fu with a short position of China General. Check out your portfolio center. Please also check ongoing floating volatility patterns of San Fu and China General.
Diversification Opportunities for San Fu and China General
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between San and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding San Fu Chemical and China General Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China General Plastics and San Fu 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 San Fu Chemical are associated (or correlated) with China General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China General Plastics has no effect on the direction of San Fu i.e., San Fu and China General go up and down completely randomly.
Pair Corralation between San Fu and China General
Assuming the 90 days trading horizon San Fu Chemical is expected to under-perform the China General. But the stock apears to be less risky and, when comparing its historical volatility, San Fu Chemical is 1.44 times less risky than China General. The stock trades about -0.3 of its potential returns per unit of risk. The China General Plastics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,225 in China General Plastics on November 5, 2024 and sell it today you would earn a total of 30.00 from holding China General Plastics or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
San Fu Chemical vs. China General Plastics
Performance |
| Timeline |
| San Fu Chemical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| China General Plastics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
San Fu and China General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with San Fu and China General
The main advantage of trading using opposite San Fu and China General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if San Fu position performs unexpectedly, China General 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 China General will offset losses from the drop in China General's long position.The idea behind San Fu Chemical and China General Plastics 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.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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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