Correlation Between Runjian Communication and Sunwave Communications
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By analyzing existing cross correlation between Runjian Communication Co and Sunwave Communications Co, you can compare the effects of market volatilities on Runjian Communication and Sunwave 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 Runjian Communication with a short position of Sunwave Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Runjian Communication and Sunwave Communications.
Diversification Opportunities for Runjian Communication and Sunwave Communications
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Runjian and Sunwave is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Runjian Communication Co and Sunwave Communications Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunwave Communications and Runjian Communication 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 Runjian Communication Co are associated (or correlated) with Sunwave Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunwave Communications has no effect on the direction of Runjian Communication i.e., Runjian Communication and Sunwave Communications go up and down completely randomly.
Pair Corralation between Runjian Communication and Sunwave Communications
Assuming the 90 days trading horizon Runjian Communication Co is expected to under-perform the Sunwave Communications. But the stock apears to be less risky and, when comparing its historical volatility, Runjian Communication Co is 1.6 times less risky than Sunwave Communications. The stock trades about -0.05 of its potential returns per unit of risk. The Sunwave Communications Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 543.00 in Sunwave Communications Co on August 25, 2024 and sell it today you would earn a total of 51.00 from holding Sunwave Communications Co or generate 9.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Runjian Communication Co vs. Sunwave Communications Co
Performance |
| Timeline |
| Runjian Communication |
| Sunwave Communications |
Runjian Communication and Sunwave Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Runjian Communication and Sunwave Communications
The main advantage of trading using opposite Runjian Communication and Sunwave Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Runjian Communication position performs unexpectedly, Sunwave 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 Sunwave Communications will offset losses from the drop in Sunwave Communications' long position.The idea behind Runjian Communication Co and Sunwave 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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