Correlation Between Kossan Rubber and Sincerity Applied

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

By analyzing existing cross correlation between Kossan Rubber Industries and Sincerity Applied Materials, you can compare the effects of market volatilities on Kossan Rubber and Sincerity Applied 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 Kossan Rubber with a short position of Sincerity Applied. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kossan Rubber and Sincerity Applied.

Diversification Opportunities for Kossan Rubber and Sincerity Applied

0.0

Correlation Coefficient

Kossan Rubber  Sincerity Applied

Pay attention - limited upside

The 3 months correlation between Kossan and Sincerity is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kossan Rubber Industries and Sincerity Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sincerity Applied and Kossan Rubber 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 Kossan Rubber Industries are associated (or correlated) with Sincerity Applied. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sincerity Applied has no effect on the direction of Kossan Rubber i.e., Kossan Rubber and Sincerity Applied go up and down completely randomly.

Pair Corralation between Kossan Rubber and Sincerity Applied

If you would invest  11.00  in Sincerity Applied Materials on February 8, 2024 and sell it today you would lose (10.10) from holding Sincerity Applied Materials or give up 91.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Kossan Rubber Industries  vs.  Sincerity Applied Materials

Kossan Rubber Industries

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Kossan Rubber Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Kossan Rubber is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sincerity Applied

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sincerity Applied Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak basic indicators, Sincerity Applied exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kossan Rubber and Sincerity Applied

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

The idea behind Kossan Rubber Industries and Sincerity Applied Materials 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 Transaction History module to view history of all your transactions and understand their impact on performance.