Correlation Between Sanyang and Fittech

Can any of the company-specific risk be diversified away by investing in both Sanyang and Fittech 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 Sanyang and Fittech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sanyang Motor Co and Fittech Co, you can compare the effects of market volatilities on Sanyang and Fittech 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 Sanyang with a short position of Fittech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanyang and Fittech.

Diversification Opportunities for Sanyang and Fittech

0.37

Correlation Coefficient

Sanyang  Fittech

Weak diversification

The 3 months correlation between Sanyang and Fittech is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sanyang Motor Co and Fittech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fittech and Sanyang 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 Sanyang Motor Co are associated (or correlated) with Fittech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fittech has no effect on the direction of Sanyang i.e., Sanyang and Fittech go up and down completely randomly.

Pair Corralation between Sanyang and Fittech

Assuming the 90 days trading horizon Sanyang Motor Co is expected to generate 0.32 times more return on investment than Fittech. However, Sanyang Motor Co is 3.09 times less risky than Fittech. It trades about -0.14 of its potential returns per unit of risk. Fittech Co is currently generating about -0.05 per unit of risk. If you would invest  7,570  in Sanyang Motor Co on September 23, 2024 and sell it today you would lose (810.00) from holding Sanyang Motor Co or give up 10.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sanyang Motor Co  vs.  Fittech Co

Sanyang Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sanyang Motor Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Fittech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fittech Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Sanyang and Fittech

The main advantage of trading using opposite Sanyang and Fittech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanyang position performs unexpectedly, Fittech 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 Fittech will offset losses from the drop in Fittech's long position.

The idea behind Sanyang Motor Co and Fittech Co 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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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.