Correlation Between Ecolab and SinoMedia Holding

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

By analyzing existing cross correlation between Ecolab Inc and SinoMedia Holding Limited, you can compare the effects of market volatilities on Ecolab and SinoMedia Holding 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 Ecolab with a short position of SinoMedia Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and SinoMedia Holding.

Diversification Opportunities for Ecolab and SinoMedia Holding

0.22

Correlation Coefficient

Ecolab  SinoMedia Holding

Modest diversification

The 3 months correlation between Ecolab and SinoMedia is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and SinoMedia Holding Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SinoMedia Holding and Ecolab 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 Ecolab Inc are associated (or correlated) with SinoMedia Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SinoMedia Holding has no effect on the direction of Ecolab i.e., Ecolab and SinoMedia Holding go up and down completely randomly.

Pair Corralation between Ecolab and SinoMedia Holding

Assuming the 90 days horizon Ecolab is expected to generate 4.46 times less return on investment than SinoMedia Holding. But when comparing it to its historical volatility, Ecolab Inc is 3.51 times less risky than SinoMedia Holding. It trades about 0.03 of its potential returns per unit of risk. SinoMedia Holding Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  18.00  in SinoMedia Holding Limited on May 6, 2025 and sell it today you would earn a total of  1.00  from holding SinoMedia Holding Limited or generate 5.56% return on investment over 90 days.

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

Ecolab Inc  vs.  SinoMedia Holding Limited

Ecolab Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ecolab Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Ecolab is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SinoMedia Holding

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SinoMedia Holding Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, SinoMedia Holding may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Ecolab and SinoMedia Holding

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

The idea behind Ecolab Inc and SinoMedia Holding Limited 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.

Check out your portfolio center.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.