Correlation Between Sunplus Technology and ALi Corp
Can any of the company-specific risk be diversified away by investing in both Sunplus Technology and ALi Corp 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 Sunplus Technology and ALi Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunplus Technology Co and ALi Corp, you can compare the effects of market volatilities on Sunplus Technology and ALi Corp 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 Sunplus Technology with a short position of ALi Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunplus Technology and ALi Corp.
Diversification Opportunities for Sunplus Technology and ALi Corp
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sunplus and ALi is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sunplus Technology Co and ALi Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALi Corp and Sunplus Technology 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 Sunplus Technology Co are associated (or correlated) with ALi Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALi Corp has no effect on the direction of Sunplus Technology i.e., Sunplus Technology and ALi Corp go up and down completely randomly.
Pair Corralation between Sunplus Technology and ALi Corp
Assuming the 90 days trading horizon Sunplus Technology Co is expected to generate 0.49 times more return on investment than ALi Corp. However, Sunplus Technology Co is 2.03 times less risky than ALi Corp. It trades about -0.13 of its potential returns per unit of risk. ALi Corp is currently generating about -0.23 per unit of risk. If you would invest 2,945 in Sunplus Technology Co on September 1, 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunplus Technology Co vs. ALi Corp
Performance |
| Timeline |
| Sunplus Technology |
| ALi Corp |
Sunplus Technology and ALi Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunplus Technology and ALi Corp
The main advantage of trading using opposite Sunplus Technology and ALi Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunplus Technology position performs unexpectedly, ALi Corp 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 ALi Corp will offset losses from the drop in ALi Corp's long position.The idea behind Sunplus Technology Co and ALi Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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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