Correlation Between ESUN Financial and StShine Optical
Can any of the company-specific risk be diversified away by investing in both ESUN Financial and StShine Optical 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 ESUN Financial and StShine Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESUN Financial Holding and StShine Optical Co, you can compare the effects of market volatilities on ESUN Financial and StShine Optical 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 ESUN Financial with a short position of StShine Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESUN Financial and StShine Optical.
Diversification Opportunities for ESUN Financial and StShine Optical
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ESUN and StShine is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding ESUN Financial Holding and StShine Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StShine Optical and ESUN Financial 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 ESUN Financial Holding are associated (or correlated) with StShine Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StShine Optical has no effect on the direction of ESUN Financial i.e., ESUN Financial and StShine Optical go up and down completely randomly.
Pair Corralation between ESUN Financial and StShine Optical
Assuming the 90 days trading horizon ESUN Financial is expected to generate 21.29 times less return on investment than StShine Optical. But when comparing it to its historical volatility, ESUN Financial Holding is 2.34 times less risky than StShine Optical. It trades about 0.01 of its potential returns per unit of risk. StShine Optical Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 21,250 in StShine Optical Co on August 30, 2024 and sell it today you would earn a total of 1,200 from holding StShine Optical Co or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESUN Financial Holding vs. StShine Optical Co
Performance |
| Timeline |
| ESUN Financial Holding |
| StShine Optical |
ESUN Financial and StShine Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESUN Financial and StShine Optical
The main advantage of trading using opposite ESUN Financial and StShine Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESUN Financial position performs unexpectedly, StShine Optical 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 StShine Optical will offset losses from the drop in StShine Optical's long position.| ESUN Financial vs. Mega Financial Holding | ESUN Financial vs. CTBC Financial Holding | ESUN Financial vs. First Financial Holding | ESUN Financial vs. Fubon Financial Holding |
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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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