Correlation Between Great China and Sentronic International
Can any of the company-specific risk be diversified away by investing in both Great China and Sentronic International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Great China and Sentronic International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great China Metal and Sentronic International, you can compare the effects of market volatilities on Great China and Sentronic International 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 Great China with a short position of Sentronic International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great China and Sentronic International.
Diversification Opportunities for Great China and Sentronic International
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Great and Sentronic is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Great China Metal and Sentronic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentronic International and Great China 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 Great China Metal are associated (or correlated) with Sentronic International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentronic International has no effect on the direction of Great China i.e., Great China and Sentronic International go up and down completely randomly.
Pair Corralation between Great China and Sentronic International
Assuming the 90 days trading horizon Great China Metal is expected to generate 0.21 times more return on investment than Sentronic International. However, Great China Metal is 4.76 times less risky than Sentronic International. It trades about -0.01 of its potential returns per unit of risk. Sentronic International is currently generating about -0.01 per unit of risk. If you would invest 2,331 in Great China Metal on October 23, 2024 and sell it today you would lose (36.00) from holding Great China Metal or give up 1.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great China Metal vs. Sentronic International
Performance |
| Timeline |
| Great China Metal |
| Sentronic International |
Great China and Sentronic International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great China and Sentronic International
The main advantage of trading using opposite Great China and Sentronic International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great China position performs unexpectedly, Sentronic International 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 Sentronic International will offset losses from the drop in Sentronic International's long position.| Great China vs. Cathay Real Estate | Great China vs. Huaku Development Co | Great China vs. BES Engineering Co | Great China vs. Prince Housing Development |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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