Correlation Between Sunwave Communications and Huaneng Lancang
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By analyzing existing cross correlation between Sunwave Communications Co and Huaneng Lancang River, you can compare the effects of market volatilities on Sunwave Communications and Huaneng Lancang 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 Sunwave Communications with a short position of Huaneng Lancang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunwave Communications and Huaneng Lancang.
Diversification Opportunities for Sunwave Communications and Huaneng Lancang
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sunwave and Huaneng is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sunwave Communications Co and Huaneng Lancang River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huaneng Lancang River and Sunwave Communications 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 Sunwave Communications Co are associated (or correlated) with Huaneng Lancang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huaneng Lancang River has no effect on the direction of Sunwave Communications i.e., Sunwave Communications and Huaneng Lancang go up and down completely randomly.
Pair Corralation between Sunwave Communications and Huaneng Lancang
Assuming the 90 days trading horizon Sunwave Communications Co is expected to generate 4.64 times more return on investment than Huaneng Lancang. However, Sunwave Communications is 4.64 times more volatile than Huaneng Lancang River. It trades about 0.43 of its potential returns per unit of risk. Huaneng Lancang River is currently generating about 0.02 per unit of risk. If you would invest 574.00 in Sunwave Communications Co on September 18, 2024 and sell it today you would earn a total of 407.00 from holding Sunwave Communications Co or generate 70.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sunwave Communications Co vs. Huaneng Lancang River
Performance |
Timeline |
Sunwave Communications |
Huaneng Lancang River |
Sunwave Communications and Huaneng Lancang Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sunwave Communications and Huaneng Lancang
The main advantage of trading using opposite Sunwave Communications and Huaneng Lancang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunwave Communications position performs unexpectedly, Huaneng Lancang 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 Huaneng Lancang will offset losses from the drop in Huaneng Lancang's long position.The idea behind Sunwave Communications Co and Huaneng Lancang River 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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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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