Correlation Between Century Wind and Sunplus Technology
Can any of the company-specific risk be diversified away by investing in both Century Wind and Sunplus Technology 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 Century Wind and Sunplus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Wind Power and Sunplus Technology Co, you can compare the effects of market volatilities on Century Wind and Sunplus Technology 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 Century Wind with a short position of Sunplus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Wind and Sunplus Technology.
Diversification Opportunities for Century Wind and Sunplus Technology
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Century and Sunplus is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Century Wind Power and Sunplus Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunplus Technology and Century Wind 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 Century Wind Power are associated (or correlated) with Sunplus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunplus Technology has no effect on the direction of Century Wind i.e., Century Wind and Sunplus Technology go up and down completely randomly.
Pair Corralation between Century Wind and Sunplus Technology
Assuming the 90 days trading horizon Century Wind Power is expected to under-perform the Sunplus Technology. But the stock apears to be less risky and, when comparing its historical volatility, Century Wind Power is 1.24 times less risky than Sunplus Technology. The stock trades about -0.37 of its potential returns per unit of risk. The Sunplus Technology Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,785 in Sunplus Technology Co on October 20, 2024 and sell it today you would lose (20.00) from holding Sunplus Technology Co or give up 0.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Wind Power vs. Sunplus Technology Co
Performance |
| Timeline |
| Century Wind Power |
| Sunplus Technology |
Century Wind and Sunplus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Wind and Sunplus Technology
The main advantage of trading using opposite Century Wind and Sunplus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Wind position performs unexpectedly, Sunplus Technology 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 Sunplus Technology will offset losses from the drop in Sunplus Technology's long position.| Century Wind vs. STL Technology Co | Century Wind vs. Arbor Technology | Century Wind vs. Feature Integration Technology | Century Wind vs. Yonyu Plastics Co |
| Sunplus Technology vs. Realtek Semiconductor Corp | Sunplus Technology vs. VIA Technologies | Sunplus Technology vs. Silicon Integrated Systems | Sunplus Technology vs. Winbond Electronics 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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