Correlation Between SAIC and New China
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By analyzing existing cross correlation between SAIC Motor Corp and New China Life, you can compare the effects of market volatilities on SAIC and New 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 SAIC with a short position of New China. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAIC and New China.
Diversification Opportunities for SAIC and New China
Weak diversification
The 3 months correlation between SAIC and New is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding SAIC Motor Corp and New China Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New China Life and SAIC 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 SAIC Motor Corp are associated (or correlated) with New China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New China Life has no effect on the direction of SAIC i.e., SAIC and New China go up and down completely randomly.
Pair Corralation between SAIC and New China
Assuming the 90 days trading horizon SAIC is expected to generate 1.46 times less return on investment than New China. But when comparing it to its historical volatility, SAIC Motor Corp is 1.32 times less risky than New China. It trades about 0.05 of its potential returns per unit of risk. New China Life is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,177 in New China Life on September 28, 2024 and sell it today you would earn a total of 1,920 from holding New China Life or generate 60.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
SAIC Motor Corp vs. New China Life
Performance |
| Timeline |
| SAIC Motor Corp |
| New China Life |
SAIC and New China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAIC and New China
The main advantage of trading using opposite SAIC and New China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAIC position performs unexpectedly, New 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 New China will offset losses from the drop in New China's long position.The idea behind SAIC Motor Corp and New China Life 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.| New China vs. Grandblue Environment Co | New China vs. Shenzhen Centralcon Investment | New China vs. Henan Shuanghui Investment | New China vs. Nuode Investment 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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