Correlation Between Sino AG and KYUSHU EL
Can any of the company-specific risk be diversified away by investing in both Sino AG and KYUSHU EL 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 Sino AG and KYUSHU EL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sino AG and KYUSHU EL PWR, you can compare the effects of market volatilities on Sino AG and KYUSHU EL 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 Sino AG with a short position of KYUSHU EL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino AG and KYUSHU EL.
Diversification Opportunities for Sino AG and KYUSHU EL
Pay attention - limited upside
The 3 months correlation between Sino and KYUSHU is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sino AG and KYUSHU EL PWR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KYUSHU EL PWR and Sino AG 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 Sino AG are associated (or correlated) with KYUSHU EL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KYUSHU EL PWR has no effect on the direction of Sino AG i.e., Sino AG and KYUSHU EL go up and down completely randomly.
Pair Corralation between Sino AG and KYUSHU EL
Assuming the 90 days horizon Sino AG is expected to generate 1.04 times more return on investment than KYUSHU EL. However, Sino AG is 1.04 times more volatile than KYUSHU EL PWR. It trades about 0.09 of its potential returns per unit of risk. KYUSHU EL PWR is currently generating about 0.07 per unit of risk. If you would invest 2,415 in Sino AG on September 3, 2024 and sell it today you would earn a total of 3,935 from holding Sino AG or generate 162.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sino AG vs. KYUSHU EL PWR
Performance |
| Timeline |
| Sino AG |
| KYUSHU EL PWR |
Sino AG and KYUSHU EL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sino AG and KYUSHU EL
The main advantage of trading using opposite Sino AG and KYUSHU EL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sino AG position performs unexpectedly, KYUSHU EL 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 KYUSHU EL will offset losses from the drop in KYUSHU EL's long position.The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Sino AG as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Sino AG's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Sino AG's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Sino AG.
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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