Correlation Between Southern PublishingMedia and CIMC Vehicles

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Can any of the company-specific risk be diversified away by investing in both Southern PublishingMedia and CIMC Vehicles 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 Southern PublishingMedia and CIMC Vehicles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern PublishingMedia Co and CIMC Vehicles Co, you can compare the effects of market volatilities on Southern PublishingMedia and CIMC Vehicles 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 Southern PublishingMedia with a short position of CIMC Vehicles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern PublishingMedia and CIMC Vehicles.

Diversification Opportunities for Southern PublishingMedia and CIMC Vehicles

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Southern and CIMC is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Southern PublishingMedia Co and CIMC Vehicles Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIMC Vehicles and Southern PublishingMedia 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 Southern PublishingMedia Co are associated (or correlated) with CIMC Vehicles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIMC Vehicles has no effect on the direction of Southern PublishingMedia i.e., Southern PublishingMedia and CIMC Vehicles go up and down completely randomly.

Pair Corralation between Southern PublishingMedia and CIMC Vehicles

Assuming the 90 days trading horizon Southern PublishingMedia is expected to generate 1.03 times less return on investment than CIMC Vehicles. But when comparing it to its historical volatility, Southern PublishingMedia Co is 1.02 times less risky than CIMC Vehicles. It trades about 0.09 of its potential returns per unit of risk. CIMC Vehicles Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  856.00  in CIMC Vehicles Co on September 5, 2024 and sell it today you would earn a total of  135.00  from holding CIMC Vehicles Co or generate 15.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Southern PublishingMedia Co  vs.  CIMC Vehicles Co

 Performance 
       Timeline  
Southern PublishingMedia 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Southern PublishingMedia Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Southern PublishingMedia sustained solid returns over the last few months and may actually be approaching a breakup point.
CIMC Vehicles 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in CIMC Vehicles Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CIMC Vehicles sustained solid returns over the last few months and may actually be approaching a breakup point.

Southern PublishingMedia and CIMC Vehicles Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Southern PublishingMedia and CIMC Vehicles

The main advantage of trading using opposite Southern PublishingMedia and CIMC Vehicles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern PublishingMedia position performs unexpectedly, CIMC Vehicles 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 CIMC Vehicles will offset losses from the drop in CIMC Vehicles' long position.
The idea behind Southern PublishingMedia Co and CIMC Vehicles 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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