Correlation Between Sinocat Environmental and Anhui Fuhuang
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By analyzing existing cross correlation between Sinocat Environmental Technology and Anhui Fuhuang Steel, you can compare the effects of market volatilities on Sinocat Environmental and Anhui Fuhuang 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 Sinocat Environmental with a short position of Anhui Fuhuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinocat Environmental and Anhui Fuhuang.
Diversification Opportunities for Sinocat Environmental and Anhui Fuhuang
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sinocat and Anhui is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sinocat Environmental Technolo and Anhui Fuhuang Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Fuhuang Steel and Sinocat Environmental 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 Sinocat Environmental Technology are associated (or correlated) with Anhui Fuhuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Fuhuang Steel has no effect on the direction of Sinocat Environmental i.e., Sinocat Environmental and Anhui Fuhuang go up and down completely randomly.
Pair Corralation between Sinocat Environmental and Anhui Fuhuang
Assuming the 90 days trading horizon Sinocat Environmental Technology is expected to under-perform the Anhui Fuhuang. But the stock apears to be less risky and, when comparing its historical volatility, Sinocat Environmental Technology is 1.2 times less risky than Anhui Fuhuang. The stock trades about -0.02 of its potential returns per unit of risk. The Anhui Fuhuang Steel is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 571.00 in Anhui Fuhuang Steel on November 9, 2024 and sell it today you would earn a total of 18.00 from holding Anhui Fuhuang Steel or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 75.58% |
| Values | Daily Returns |
Sinocat Environmental Technolo vs. Anhui Fuhuang Steel
Performance |
| Timeline |
| Sinocat Environmental |
Risk-Adjusted Performance
Insignificant
Weak | Strong |
| Anhui Fuhuang Steel |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Sinocat Environmental and Anhui Fuhuang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinocat Environmental and Anhui Fuhuang
The main advantage of trading using opposite Sinocat Environmental and Anhui Fuhuang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinocat Environmental position performs unexpectedly, Anhui Fuhuang 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 Anhui Fuhuang will offset losses from the drop in Anhui Fuhuang's long position.The idea behind Sinocat Environmental Technology and Anhui Fuhuang Steel 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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