Correlation Between ESUN Financial and Top Union
Can any of the company-specific risk be diversified away by investing in both ESUN Financial and Top Union 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 Top Union 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 Top Union Electronics, you can compare the effects of market volatilities on ESUN Financial and Top Union 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 Top Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESUN Financial and Top Union.
Diversification Opportunities for ESUN Financial and Top Union
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ESUN and Top is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding ESUN Financial Holding and Top Union Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Union 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 Top Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Union Electronics has no effect on the direction of ESUN Financial i.e., ESUN Financial and Top Union go up and down completely randomly.
Pair Corralation between ESUN Financial and Top Union
Assuming the 90 days trading horizon ESUN Financial Holding is expected to under-perform the Top Union. But the stock apears to be less risky and, when comparing its historical volatility, ESUN Financial Holding is 1.19 times less risky than Top Union. The stock trades about -0.01 of its potential returns per unit of risk. The Top Union Electronics is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,185 in Top Union Electronics on August 31, 2024 and sell it today you would earn a total of 105.00 from holding Top Union Electronics or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESUN Financial Holding vs. Top Union Electronics
Performance |
| Timeline |
| ESUN Financial Holding |
| Top Union Electronics |
ESUN Financial and Top Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESUN Financial and Top Union
The main advantage of trading using opposite ESUN Financial and Top Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESUN Financial position performs unexpectedly, Top Union 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 Top Union will offset losses from the drop in Top Union's long position.| ESUN Financial vs. Central Reinsurance Corp | ESUN Financial vs. Huaku Development Co | ESUN Financial vs. Fubon Financial Holding | ESUN Financial vs. CTBC Financial Holding |
| Top Union vs. Sino American Silicon Products | Top Union vs. Powertech Technology | Top Union vs. Formosa Sumco Technology | Top Union vs. Radiant Opto Electronics Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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