Correlation Between Eastern Media and Sunny Friend
Can any of the company-specific risk be diversified away by investing in both Eastern Media 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 Eastern Media and Sunny Friend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Media International and Sunny Friend Environmental, you can compare the effects of market volatilities on Eastern Media 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 Eastern Media with a short position of Sunny Friend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Media and Sunny Friend.
Diversification Opportunities for Eastern Media and Sunny Friend
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eastern and Sunny is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Media International 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 Eastern Media 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 Eastern Media International 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 Eastern Media i.e., Eastern Media and Sunny Friend go up and down completely randomly.
Pair Corralation between Eastern Media and Sunny Friend
Assuming the 90 days trading horizon Eastern Media International is expected to under-perform the Sunny Friend. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Media International is 1.5 times less risky than Sunny Friend. The stock trades about -0.14 of its potential returns per unit of risk. The Sunny Friend Environmental is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 9,440 in Sunny Friend Environmental on August 30, 2024 and sell it today you would lose (310.00) from holding Sunny Friend Environmental or give up 3.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Media International vs. Sunny Friend Environmental
Performance |
| Timeline |
| Eastern Media Intern |
| Sunny Friend Environ |
Eastern Media and Sunny Friend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Media and Sunny Friend
The main advantage of trading using opposite Eastern Media and Sunny Friend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Media 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.| Eastern Media vs. Yang Ming Marine | Eastern Media vs. U Ming Marine Transport | Eastern Media vs. China Airlines |
| Sunny Friend vs. Cleanaway Co | Sunny Friend vs. ECOVE Environment Corp | Sunny Friend vs. President Chain Store |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |