Correlation Between Macronix International and Sunplus Technology
Can any of the company-specific risk be diversified away by investing in both Macronix International 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 Macronix International and Sunplus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macronix International Co and Sunplus Technology Co, you can compare the effects of market volatilities on Macronix International 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 Macronix International with a short position of Sunplus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macronix International and Sunplus Technology.
Diversification Opportunities for Macronix International and Sunplus Technology
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Macronix and Sunplus is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Macronix International Co and Sunplus Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunplus Technology and Macronix International 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 Macronix International Co 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 Macronix International i.e., Macronix International and Sunplus Technology go up and down completely randomly.
Pair Corralation between Macronix International and Sunplus Technology
Assuming the 90 days trading horizon Macronix International Co is expected to under-perform the Sunplus Technology. In addition to that, Macronix International is 1.39 times more volatile than Sunplus Technology Co. It trades about -0.24 of its total potential returns per unit of risk. Sunplus Technology Co is currently generating about -0.13 per unit of volatility. If you would invest 2,945 in Sunplus Technology Co on August 31, 2024 and sell it today you would lose (145.00) from holding Sunplus Technology Co or give up 4.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macronix International Co vs. Sunplus Technology Co
Performance |
| Timeline |
| Macronix International |
| Sunplus Technology |
Macronix International and Sunplus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macronix International and Sunplus Technology
The main advantage of trading using opposite Macronix International and Sunplus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macronix International 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.| Macronix International vs. United Microelectronics | Macronix International vs. Winbond Electronics Corp |
| Sunplus Technology vs. United Microelectronics | Sunplus Technology vs. Winbond Electronics Corp | Sunplus Technology vs. Macronix International Co |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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