Correlation Between Sinocat Environmental and Shandong Sanyuan
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By analyzing existing cross correlation between Sinocat Environmental Technology and Shandong Sanyuan Biotechnology, you can compare the effects of market volatilities on Sinocat Environmental and Shandong Sanyuan 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 Shandong Sanyuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinocat Environmental and Shandong Sanyuan.
Diversification Opportunities for Sinocat Environmental and Shandong Sanyuan
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sinocat and Shandong is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sinocat Environmental Technolo and Shandong Sanyuan Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Sanyuan Bio 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 Shandong Sanyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Sanyuan Bio has no effect on the direction of Sinocat Environmental i.e., Sinocat Environmental and Shandong Sanyuan go up and down completely randomly.
Pair Corralation between Sinocat Environmental and Shandong Sanyuan
Assuming the 90 days trading horizon Sinocat Environmental Technology is expected to under-perform the Shandong Sanyuan. In addition to that, Sinocat Environmental is 1.53 times more volatile than Shandong Sanyuan Biotechnology. It trades about -0.02 of its total potential returns per unit of risk. Shandong Sanyuan Biotechnology is currently generating about -0.02 per unit of volatility. If you would invest 3,546 in Shandong Sanyuan Biotechnology on November 9, 2024 and sell it today you would lose (978.00) from holding Shandong Sanyuan Biotechnology or give up 27.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sinocat Environmental Technolo vs. Shandong Sanyuan Biotechnology
Performance |
| Timeline |
| Sinocat Environmental |
Risk-Adjusted Performance
Insignificant
Weak | Strong |
| Shandong Sanyuan Bio |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Sinocat Environmental and Shandong Sanyuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinocat Environmental and Shandong Sanyuan
The main advantage of trading using opposite Sinocat Environmental and Shandong Sanyuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinocat Environmental position performs unexpectedly, Shandong Sanyuan 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 Shandong Sanyuan will offset losses from the drop in Shandong Sanyuan's long position.The idea behind Sinocat Environmental Technology and Shandong Sanyuan Biotechnology 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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