Correlation Between Sinomach Automobile and BOE Technology

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

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

Diversification Opportunities for Sinomach Automobile and BOE Technology

0.76

Correlation Coefficient

Sinomach Automobile  BOE Technology

Poor diversification

The 3 months correlation between Sinomach and BOE is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sinomach Automobile Co and BOE Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOE Technology Group and Sinomach Automobile 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 Sinomach Automobile Co are associated (or correlated) with BOE Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOE Technology Group has no effect on the direction of Sinomach Automobile i.e., Sinomach Automobile and BOE Technology go up and down completely randomly.

Pair Corralation between Sinomach Automobile and BOE Technology

Assuming the 90 days trading horizon Sinomach Automobile Co is expected to generate 1.33 times more return on investment than BOE Technology. However, Sinomach Automobile is 1.33 times more volatile than BOE Technology Group. It trades about 0.05 of its potential returns per unit of risk. BOE Technology Group is currently generating about 0.05 per unit of risk. If you would invest  613.00  in Sinomach Automobile Co on September 27, 2024 and sell it today you would earn a total of  37.00  from holding Sinomach Automobile Co or generate 6.04% return on investment over 90 days.

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

Sinomach Automobile Co  vs.  BOE Technology Group

Sinomach Automobile

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sinomach Automobile Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sinomach Automobile may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BOE Technology Group

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BOE Technology Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BOE Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sinomach Automobile and BOE Technology

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

The idea behind Sinomach Automobile Co and BOE Technology Group 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..