Correlation Between SUNSEA Telecommunicatio and Eastern Communications
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By analyzing existing cross correlation between SUNSEA Telecommunications Co and Eastern Communications Co, you can compare the effects of market volatilities on SUNSEA Telecommunicatio and Eastern Communications 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 SUNSEA Telecommunicatio with a short position of Eastern Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUNSEA Telecommunicatio and Eastern Communications.
Diversification Opportunities for SUNSEA Telecommunicatio and Eastern Communications
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SUNSEA and Eastern is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding SUNSEA Telecommunications Co and Eastern Communications Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Communications and SUNSEA Telecommunicatio 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 SUNSEA Telecommunications Co are associated (or correlated) with Eastern Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Communications has no effect on the direction of SUNSEA Telecommunicatio i.e., SUNSEA Telecommunicatio and Eastern Communications go up and down completely randomly.
Pair Corralation between SUNSEA Telecommunicatio and Eastern Communications
Assuming the 90 days trading horizon SUNSEA Telecommunications Co is expected to under-perform the Eastern Communications. In addition to that, SUNSEA Telecommunicatio is 1.41 times more volatile than Eastern Communications Co. It trades about -0.16 of its total potential returns per unit of risk. Eastern Communications Co is currently generating about -0.03 per unit of volatility. If you would invest 42.00 in Eastern Communications Co on August 27, 2024 and sell it today you would lose (1.00) from holding Eastern Communications Co or give up 2.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SUNSEA Telecommunications Co vs. Eastern Communications Co
Performance |
| Timeline |
| SUNSEA Telecommunicatio |
| Eastern Communications |
SUNSEA Telecommunicatio and Eastern Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SUNSEA Telecommunicatio and Eastern Communications
The main advantage of trading using opposite SUNSEA Telecommunicatio and Eastern Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUNSEA Telecommunicatio position performs unexpectedly, Eastern Communications 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 Eastern Communications will offset losses from the drop in Eastern Communications' long position.The idea behind SUNSEA Telecommunications Co and Eastern Communications Co 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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