Correlation Between ESUN Financial and New Era
Can any of the company-specific risk be diversified away by investing in both ESUN Financial and New Era 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 New Era 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 New Era Electronics, you can compare the effects of market volatilities on ESUN Financial and New Era 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 New Era. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESUN Financial and New Era.
Diversification Opportunities for ESUN Financial and New Era
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ESUN and New is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding ESUN Financial Holding and New Era Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Era Electronics 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 New Era. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Era Electronics has no effect on the direction of ESUN Financial i.e., ESUN Financial and New Era go up and down completely randomly.
Pair Corralation between ESUN Financial and New Era
Assuming the 90 days trading horizon ESUN Financial is expected to generate 6.6 times less return on investment than New Era. But when comparing it to its historical volatility, ESUN Financial Holding is 3.98 times less risky than New Era. It trades about 0.01 of its potential returns per unit of risk. New Era Electronics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 12,150 in New Era Electronics on September 12, 2024 and sell it today you would earn a total of 50.00 from holding New Era Electronics or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESUN Financial Holding vs. New Era Electronics
Performance |
| Timeline |
| ESUN Financial Holding |
| New Era Electronics |
ESUN Financial and New Era Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESUN Financial and New Era
The main advantage of trading using opposite ESUN Financial and New Era positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESUN Financial position performs unexpectedly, New Era 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 New Era will offset losses from the drop in New Era's long position.| ESUN Financial vs. Central Reinsurance Corp | ESUN Financial vs. Huaku Development Co | ESUN Financial vs. Fubon Financial Holding | ESUN Financial vs. Chailease Holding Co |
| New Era vs. Microtips Technology | New Era vs. Voltronic Power Technology | New Era vs. Asia Metal Industries | New Era vs. China Metal Products |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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