Correlation Between Allis Electric and Sunny Friend
Can any of the company-specific risk be diversified away by investing in both Allis Electric and Sunny Friend 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 Allis Electric and Sunny Friend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allis Electric Co and Sunny Friend Environmental, you can compare the effects of market volatilities on Allis Electric and Sunny Friend 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 Allis Electric with a short position of Sunny Friend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allis Electric and Sunny Friend.
Diversification Opportunities for Allis Electric and Sunny Friend
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Allis and Sunny is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Allis Electric Co and Sunny Friend Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Friend Environ and Allis Electric 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 Allis Electric Co are associated (or correlated) with Sunny Friend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Friend Environ has no effect on the direction of Allis Electric i.e., Allis Electric and Sunny Friend go up and down completely randomly.
Pair Corralation between Allis Electric and Sunny Friend
Assuming the 90 days trading horizon Allis Electric Co is expected to generate 2.13 times more return on investment than Sunny Friend. However, Allis Electric is 2.13 times more volatile than Sunny Friend Environmental. It trades about 0.1 of its potential returns per unit of risk. Sunny Friend Environmental is currently generating about -0.07 per unit of risk. If you would invest 3,115 in Allis Electric Co on August 28, 2024 and sell it today you would earn a total of 8,335 from holding Allis Electric Co or generate 267.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allis Electric Co vs. Sunny Friend Environmental
Performance |
| Timeline |
| Allis Electric |
| Sunny Friend Environ |
Allis Electric and Sunny Friend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allis Electric and Sunny Friend
The main advantage of trading using opposite Allis Electric and Sunny Friend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allis Electric position performs unexpectedly, Sunny Friend 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 Friend will offset losses from the drop in Sunny Friend's long position.| Allis Electric vs. Sunny Friend Environmental | Allis Electric vs. TTET Union Corp | Allis Electric vs. ECOVE Environment Corp | Allis Electric vs. Yulon Finance Corp |
| Sunny Friend vs. Cleanaway Co | Sunny Friend vs. Taiwan Secom Co | Sunny Friend vs. ECOVE Environment Corp | Sunny Friend vs. TTET Union Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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