Correlation Between Sunwave Communications and Wuhan Yangtze
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By analyzing existing cross correlation between Sunwave Communications Co and Wuhan Yangtze Communication, you can compare the effects of market volatilities on Sunwave Communications and Wuhan Yangtze 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 Wuhan Yangtze. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunwave Communications and Wuhan Yangtze.
Diversification Opportunities for Sunwave Communications and Wuhan Yangtze
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sunwave and Wuhan is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Sunwave Communications Co and Wuhan Yangtze Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wuhan Yangtze Commun 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 Wuhan Yangtze. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wuhan Yangtze Commun has no effect on the direction of Sunwave Communications i.e., Sunwave Communications and Wuhan Yangtze go up and down completely randomly.
Pair Corralation between Sunwave Communications and Wuhan Yangtze
Assuming the 90 days trading horizon Sunwave Communications is expected to generate 3.4 times less return on investment than Wuhan Yangtze. But when comparing it to its historical volatility, Sunwave Communications Co is 1.6 times less risky than Wuhan Yangtze. It trades about 0.11 of its potential returns per unit of risk. Wuhan Yangtze Communication is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,963 in Wuhan Yangtze Communication on August 28, 2024 and sell it today you would earn a total of 645.00 from holding Wuhan Yangtze Communication or generate 32.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunwave Communications Co vs. Wuhan Yangtze Communication
Performance |
| Timeline |
| Sunwave Communications |
| Wuhan Yangtze Commun |
Sunwave Communications and Wuhan Yangtze Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunwave Communications and Wuhan Yangtze
The main advantage of trading using opposite Sunwave Communications and Wuhan Yangtze positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunwave Communications position performs unexpectedly, Wuhan Yangtze 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 Wuhan Yangtze will offset losses from the drop in Wuhan Yangtze's long position.The idea behind Sunwave Communications Co and Wuhan Yangtze Communication 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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