Correlation Between Sinotrans and Dynagreen Environmental

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

By analyzing existing cross correlation between Sinotrans Ltd Class and Dynagreen Environmental Protection, you can compare the effects of market volatilities on Sinotrans and Dynagreen Environmental 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 Sinotrans with a short position of Dynagreen Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinotrans and Dynagreen Environmental.

Diversification Opportunities for Sinotrans and Dynagreen Environmental

0.7

Correlation Coefficient

Sinotrans  Dynagreen Environmental

Poor diversification

The 3 months correlation between Sinotrans and Dynagreen is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sinotrans Ltd Class and Dynagreen Environmental Protec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynagreen Environmental and Sinotrans 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 Sinotrans Ltd Class are associated (or correlated) with Dynagreen Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynagreen Environmental has no effect on the direction of Sinotrans i.e., Sinotrans and Dynagreen Environmental go up and down completely randomly.

Pair Corralation between Sinotrans and Dynagreen Environmental

Assuming the 90 days trading horizon Sinotrans Ltd Class is expected to under-perform the Dynagreen Environmental. In addition to that, Sinotrans is 1.07 times more volatile than Dynagreen Environmental Protection. It trades about -0.02 of its total potential returns per unit of risk. Dynagreen Environmental Protection is currently generating about 0.04 per unit of volatility. If you would invest  646.00  in Dynagreen Environmental Protection on September 28, 2024 and sell it today you would earn a total of  26.00  from holding Dynagreen Environmental Protection or generate 4.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Sinotrans Ltd Class  vs.  Dynagreen Environmental Protec

Sinotrans Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinotrans Ltd Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sinotrans is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dynagreen Environmental

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dynagreen Environmental Protection are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Dynagreen Environmental is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sinotrans and Dynagreen Environmental

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

The idea behind Sinotrans Ltd Class and Dynagreen Environmental Protection 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.