Correlation Between Eastern Communications and Sinosteel Luonai
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By analyzing existing cross correlation between Eastern Communications Co and Sinosteel Luonai Materials, you can compare the effects of market volatilities on Eastern Communications and Sinosteel Luonai 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 Eastern Communications with a short position of Sinosteel Luonai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Communications and Sinosteel Luonai.
Diversification Opportunities for Eastern Communications and Sinosteel Luonai
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eastern and Sinosteel is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Communications Co and Sinosteel Luonai Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinosteel Luonai Mat and Eastern Communications 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 Eastern Communications Co are associated (or correlated) with Sinosteel Luonai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinosteel Luonai Mat has no effect on the direction of Eastern Communications i.e., Eastern Communications and Sinosteel Luonai go up and down completely randomly.
Pair Corralation between Eastern Communications and Sinosteel Luonai
Assuming the 90 days trading horizon Eastern Communications Co is expected to under-perform the Sinosteel Luonai. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Communications Co is 1.07 times less risky than Sinosteel Luonai. The stock trades about -0.03 of its potential returns per unit of risk. The Sinosteel Luonai Materials is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 408.00 in Sinosteel Luonai Materials on August 27, 2024 and sell it today you would earn a total of 8.00 from holding Sinosteel Luonai Materials or generate 1.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Communications Co vs. Sinosteel Luonai Materials
Performance |
| Timeline |
| Eastern Communications |
| Sinosteel Luonai Mat |
Eastern Communications and Sinosteel Luonai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Communications and Sinosteel Luonai
The main advantage of trading using opposite Eastern Communications and Sinosteel Luonai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Communications position performs unexpectedly, Sinosteel Luonai 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 Luonai will offset losses from the drop in Sinosteel Luonai's long position.The idea behind Eastern Communications Co and Sinosteel Luonai Materials 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.
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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