Correlation Between Automobile and Sunny Electronics
Can any of the company-specific risk be diversified away by investing in both Automobile and Sunny Electronics 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 Automobile and Sunny Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and Sunny Electronics Corp, you can compare the effects of market volatilities on Automobile and Sunny Electronics 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 Automobile with a short position of Sunny Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and Sunny Electronics.
Diversification Opportunities for Automobile and Sunny Electronics
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Automobile and Sunny is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and Sunny Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Electronics Corp and Automobile 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 Automobile Pc are associated (or correlated) with Sunny Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Electronics Corp has no effect on the direction of Automobile i.e., Automobile and Sunny Electronics go up and down completely randomly.
Pair Corralation between Automobile and Sunny Electronics
Assuming the 90 days trading horizon Automobile Pc is expected to under-perform the Sunny Electronics. In addition to that, Automobile is 1.3 times more volatile than Sunny Electronics Corp. It trades about -0.04 of its total potential returns per unit of risk. Sunny Electronics Corp is currently generating about -0.03 per unit of volatility. If you would invest 258,500 in Sunny Electronics Corp on August 29, 2024 and sell it today you would lose (95,100) from holding Sunny Electronics Corp or give up 36.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automobile Pc vs. Sunny Electronics Corp
Performance |
| Timeline |
| Automobile Pc |
| Sunny Electronics Corp |
Automobile and Sunny Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and Sunny Electronics
The main advantage of trading using opposite Automobile and Sunny Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, Sunny Electronics 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 Sunny Electronics will offset losses from the drop in Sunny Electronics' long position.| Automobile vs. Busan Industrial Co | Automobile vs. Busan Ind | Automobile vs. Mirae Asset Daewoo | Automobile vs. UNISEM Co |
| Sunny Electronics vs. AptaBio Therapeutics | Sunny Electronics vs. Daewoo SBI SPAC | Sunny Electronics vs. Dream Security co | Sunny Electronics vs. Microfriend |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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