Correlation Between Iron Force and Sunny Friend
Can any of the company-specific risk be diversified away by investing in both Iron Force 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 Iron Force and Sunny Friend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Force Industrial and Sunny Friend Environmental, you can compare the effects of market volatilities on Iron Force 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 Iron Force with a short position of Sunny Friend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Force and Sunny Friend.
Diversification Opportunities for Iron Force and Sunny Friend
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Iron and Sunny is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Iron Force Industrial 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 Iron Force 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 Iron Force Industrial 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 Iron Force i.e., Iron Force and Sunny Friend go up and down completely randomly.
Pair Corralation between Iron Force and Sunny Friend
Assuming the 90 days trading horizon Iron Force Industrial is expected to under-perform the Sunny Friend. In addition to that, Iron Force is 1.41 times more volatile than Sunny Friend Environmental. It trades about -0.02 of its total potential returns per unit of risk. Sunny Friend Environmental is currently generating about -0.02 per unit of volatility. If you would invest 9,630 in Sunny Friend Environmental on September 1, 2024 and sell it today you would lose (620.00) from holding Sunny Friend Environmental or give up 6.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iron Force Industrial vs. Sunny Friend Environmental
Performance |
| Timeline |
| Iron Force Industrial |
| Sunny Friend Environ |
Iron Force and Sunny Friend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Force and Sunny Friend
The main advantage of trading using opposite Iron Force and Sunny Friend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Force 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.| Iron Force vs. Hota Industrial Mfg | Iron Force vs. BizLink Holding | Iron Force vs. Cub Elecparts | Iron Force vs. Hu Lane Associate |
| Sunny Friend vs. Cleanaway Co | Sunny Friend vs. Taiwan Secom Co | Sunny Friend vs. TTET Union Corp | Sunny Friend vs. Tehmag Foods |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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