Correlation Between China Satellite and Sinosteel Engineering
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By analyzing existing cross correlation between China Satellite Communications and Sinosteel Engineering and, you can compare the effects of market volatilities on China Satellite and Sinosteel Engineering 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 China Satellite with a short position of Sinosteel Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Satellite and Sinosteel Engineering.
Diversification Opportunities for China Satellite and Sinosteel Engineering
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Sinosteel is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding China Satellite Communications and Sinosteel Engineering and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinosteel Engineering and and China Satellite 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 China Satellite Communications are associated (or correlated) with Sinosteel Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinosteel Engineering and has no effect on the direction of China Satellite i.e., China Satellite and Sinosteel Engineering go up and down completely randomly.
Pair Corralation between China Satellite and Sinosteel Engineering
Assuming the 90 days trading horizon China Satellite Communications is expected to generate 1.96 times more return on investment than Sinosteel Engineering. However, China Satellite is 1.96 times more volatile than Sinosteel Engineering and. It trades about 0.26 of its potential returns per unit of risk. Sinosteel Engineering and is currently generating about 0.21 per unit of risk. If you would invest 1,896 in China Satellite Communications on November 9, 2024 and sell it today you would earn a total of 207.00 from holding China Satellite Communications or generate 10.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Satellite Communications vs. Sinosteel Engineering and
Performance |
| Timeline |
| China Satellite Comm |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Sinosteel Engineering and |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
China Satellite and Sinosteel Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Satellite and Sinosteel Engineering
The main advantage of trading using opposite China Satellite and Sinosteel Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Satellite position performs unexpectedly, Sinosteel Engineering 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 Sinosteel Engineering will offset losses from the drop in Sinosteel Engineering's long position.The idea behind China Satellite Communications and Sinosteel Engineering and 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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