Correlation Between Sincerity Applied and Kossan Rubber

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

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

Diversification Opportunities for Sincerity Applied and Kossan Rubber

0.02

Correlation Coefficient

Sincerity Applied  Kossan Rubber

Significant diversification

The 3 months correlation between Sincerity and Kossan is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sincerity Applied Materials and Kossan Rubber Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kossan Rubber Industries and Sincerity Applied 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 Sincerity Applied Materials are associated (or correlated) with Kossan Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kossan Rubber Industries has no effect on the direction of Sincerity Applied i.e., Sincerity Applied and Kossan Rubber go up and down completely randomly.

Pair Corralation between Sincerity Applied and Kossan Rubber

If you would invest  11.00  in Sincerity Applied Materials on January 20, 2024 and sell it today you would lose (9.10) from holding Sincerity Applied Materials or give up 82.73% of portfolio value over 90 days.

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

Sincerity Applied Materials  vs.  Kossan Rubber Industries

Sincerity Applied

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sincerity Applied Materials are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. 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.

Kossan Rubber Industries

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kossan Rubber Industries are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental drivers, Kossan Rubber may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Sincerity Applied and Kossan Rubber

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

The idea behind Sincerity Applied Materials and Kossan Rubber Industries 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.