Correlation Between Sino American and Para Light
Can any of the company-specific risk be diversified away by investing in both Sino American and Para Light 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 American and Para Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sino American Silicon Products and Para Light Electronics, you can compare the effects of market volatilities on Sino American and Para Light 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 American with a short position of Para Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino American and Para Light.
Diversification Opportunities for Sino American and Para Light
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sino and Para is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sino American Silicon Products and Para Light Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Para Light Electronics and Sino American 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 American Silicon Products are associated (or correlated) with Para Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Para Light Electronics has no effect on the direction of Sino American i.e., Sino American and Para Light go up and down completely randomly.
Pair Corralation between Sino American and Para Light
Assuming the 90 days trading horizon Sino American Silicon Products is expected to generate 1.02 times more return on investment than Para Light. However, Sino American is 1.02 times more volatile than Para Light Electronics. It trades about 0.02 of its potential returns per unit of risk. Para Light Electronics is currently generating about -0.01 per unit of risk. If you would invest 14,438 in Sino American Silicon Products on August 30, 2024 and sell it today you would earn a total of 1,462 from holding Sino American Silicon Products or generate 10.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sino American Silicon Products vs. Para Light Electronics
Performance |
| Timeline |
| Sino American Silicon |
| Para Light Electronics |
Sino American and Para Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sino American and Para Light
The main advantage of trading using opposite Sino American and Para Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sino American position performs unexpectedly, Para Light 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 Para Light will offset losses from the drop in Para Light's long position.| Sino American vs. Powertech Technology | Sino American vs. Formosa Sumco Technology | Sino American vs. Radiant Opto Electronics Corp | Sino American vs. Faraday Technology Corp |
| Para Light vs. Harvatek Corp | Para Light vs. Bright Led Electronics | Para Light vs. Ledtech Electronics Corp | Para Light vs. Everlight Electronics Co |
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 CEOs Directory module to screen CEOs from public companies around the world.
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