Correlation Between Sino American and Ardentec

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

By analyzing existing cross correlation between Sino American Silicon Products and Ardentec, you can compare the effects of market volatilities on Sino American and Ardentec 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 American with a short position of Ardentec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino American and Ardentec.

Diversification Opportunities for Sino American and Ardentec

0.84

Correlation Coefficient

Sino American  Ardentec

Very poor diversification

The 3 months correlation between Sino and Ardentec is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sino American Silicon Products and Ardentec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardentec and Sino American 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 American Silicon Products are associated (or correlated) with Ardentec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardentec has no effect on the direction of Sino American i.e., Sino American and Ardentec go up and down completely randomly.

Pair Corralation between Sino American and Ardentec

Assuming the 90 days trading horizon Sino American Silicon Products is expected to generate 0.93 times more return on investment than Ardentec. However, Sino American Silicon Products is 1.07 times less risky than Ardentec. It trades about -0.25 of its potential returns per unit of risk. Ardentec is currently generating about -0.3 per unit of risk. If you would invest  21,050  in Sino American Silicon Products on February 5, 2024 and sell it today you would lose (1,800) from holding Sino American Silicon Products or give up 8.55% of portfolio value over 90 days.

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

Sino American Silicon Products  vs.  Ardentec

Sino American Silicon

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sino American Silicon Products are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Sino American is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ardentec

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ardentec are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Ardentec is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sino American and Ardentec

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

The idea behind Sino American Silicon Products and Ardentec 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.