Correlation Between ESUN Financial and Sunmax Biotechnology
Can any of the company-specific risk be diversified away by investing in both ESUN Financial and Sunmax Biotechnology 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 Sunmax Biotechnology 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 Sunmax Biotechnology Co, you can compare the effects of market volatilities on ESUN Financial and Sunmax Biotechnology 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 Sunmax Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESUN Financial and Sunmax Biotechnology.
Diversification Opportunities for ESUN Financial and Sunmax Biotechnology
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ESUN and Sunmax is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding ESUN Financial Holding and Sunmax Biotechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunmax Biotechnology 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 Sunmax Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunmax Biotechnology has no effect on the direction of ESUN Financial i.e., ESUN Financial and Sunmax Biotechnology go up and down completely randomly.
Pair Corralation between ESUN Financial and Sunmax Biotechnology
Assuming the 90 days trading horizon ESUN Financial Holding is expected to under-perform the Sunmax Biotechnology. But the stock apears to be less risky and, when comparing its historical volatility, ESUN Financial Holding is 1.21 times less risky than Sunmax Biotechnology. The stock trades about -0.06 of its potential returns per unit of risk. The Sunmax Biotechnology Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 28,200 in Sunmax Biotechnology Co on September 2, 2024 and sell it today you would lose (400.00) from holding Sunmax Biotechnology Co or give up 1.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESUN Financial Holding vs. Sunmax Biotechnology Co
Performance |
| Timeline |
| ESUN Financial Holding |
| Sunmax Biotechnology |
ESUN Financial and Sunmax Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESUN Financial and Sunmax Biotechnology
The main advantage of trading using opposite ESUN Financial and Sunmax Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESUN Financial position performs unexpectedly, Sunmax Biotechnology 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 Sunmax Biotechnology will offset losses from the drop in Sunmax Biotechnology'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 |
| Sunmax Biotechnology vs. Medigen Vaccine Biologics | Sunmax Biotechnology vs. TaiMed Biologics | Sunmax Biotechnology vs. Adimmune Corp | Sunmax Biotechnology vs. PharmaEngine |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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