Correlation Between ESUN Financial and Simplo Technology
Can any of the company-specific risk be diversified away by investing in both ESUN Financial and Simplo Technology 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 Simplo Technology 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 Simplo Technology Co, you can compare the effects of market volatilities on ESUN Financial and Simplo Technology 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 Simplo Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESUN Financial and Simplo Technology.
Diversification Opportunities for ESUN Financial and Simplo Technology
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between ESUN and Simplo is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding ESUN Financial Holding and Simplo Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplo Technology 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 Simplo Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplo Technology has no effect on the direction of ESUN Financial i.e., ESUN Financial and Simplo Technology go up and down completely randomly.
Pair Corralation between ESUN Financial and Simplo Technology
Assuming the 90 days trading horizon ESUN Financial Holding is expected to under-perform the Simplo Technology. But the stock apears to be less risky and, when comparing its historical volatility, ESUN Financial Holding is 2.92 times less risky than Simplo Technology. The stock trades about -0.01 of its potential returns per unit of risk. The Simplo Technology Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 34,250 in Simplo Technology Co on August 31, 2024 and sell it today you would earn a total of 2,900 from holding Simplo Technology Co or generate 8.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESUN Financial Holding vs. Simplo Technology Co
Performance |
| Timeline |
| ESUN Financial Holding |
| Simplo Technology |
ESUN Financial and Simplo Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESUN Financial and Simplo Technology
The main advantage of trading using opposite ESUN Financial and Simplo Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESUN Financial position performs unexpectedly, Simplo Technology 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 Simplo Technology will offset losses from the drop in Simplo Technology'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 |
| Simplo Technology vs. Dynapack International Technology | Simplo Technology vs. Catcher Technology Co | Simplo Technology vs. Delta Electronics | Simplo Technology vs. Powertech Technology |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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