Correlation Between General Environmental and Sincerity Applied
Can any of the company-specific risk be diversified away by investing in both General Environmental and Sincerity Applied 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 General Environmental and Sincerity Applied into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Environmental Management and Sincerity Applied Materials, you can compare the effects of market volatilities on General Environmental and Sincerity Applied 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 General Environmental with a short position of Sincerity Applied. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Environmental and Sincerity Applied.
Diversification Opportunities for General Environmental and Sincerity Applied
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between General and Sincerity is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding General Environmental Manageme and Sincerity Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sincerity Applied and General 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 General Environmental Management are associated (or correlated) with Sincerity Applied. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sincerity Applied has no effect on the direction of General Environmental i.e., General Environmental and Sincerity Applied go up and down completely randomly.
Pair Corralation between General Environmental and Sincerity Applied
Given the investment horizon of 90 days General Environmental is expected to generate 3.8 times less return on investment than Sincerity Applied. But when comparing it to its historical volatility, General Environmental Management is 5.14 times less risky than Sincerity Applied. It trades about 0.06 of its potential returns per unit of risk. Sincerity Applied Materials is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.80 in Sincerity Applied Materials on September 1, 2024 and sell it today you would lose (0.68) from holding Sincerity Applied Materials or give up 85.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Environmental Manageme vs. Sincerity Applied Materials
Performance |
| Timeline |
| General Environmental |
| Sincerity Applied |
General Environmental and Sincerity Applied Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Environmental and Sincerity Applied
The main advantage of trading using opposite General Environmental and Sincerity Applied positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Environmental position performs unexpectedly, Sincerity Applied 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 Sincerity Applied will offset losses from the drop in Sincerity Applied's long position.| General Environmental vs. Element Solutions | General Environmental vs. Orion Engineered Carbons | General Environmental vs. Minerals Technologies | General Environmental vs. Ingevity Corp |
| Sincerity Applied vs. Sherwin Williams Co | Sincerity Applied vs. Air Liquide SA | Sincerity Applied vs. Air Products and | Sincerity Applied vs. Ecolab Inc |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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