Correlation Between ESUN Financial and Pontex Polyblend
Can any of the company-specific risk be diversified away by investing in both ESUN Financial and Pontex Polyblend 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 Pontex Polyblend 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 Pontex Polyblend CoLtd, you can compare the effects of market volatilities on ESUN Financial and Pontex Polyblend 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 Pontex Polyblend. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESUN Financial and Pontex Polyblend.
Diversification Opportunities for ESUN Financial and Pontex Polyblend
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ESUN and Pontex is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding ESUN Financial Holding and Pontex Polyblend CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pontex Polyblend CoLtd 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 Pontex Polyblend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pontex Polyblend CoLtd has no effect on the direction of ESUN Financial i.e., ESUN Financial and Pontex Polyblend go up and down completely randomly.
Pair Corralation between ESUN Financial and Pontex Polyblend
Assuming the 90 days trading horizon ESUN Financial Holding is expected to under-perform the Pontex Polyblend. But the stock apears to be less risky and, when comparing its historical volatility, ESUN Financial Holding is 3.52 times less risky than Pontex Polyblend. The stock trades about -0.01 of its potential returns per unit of risk. The Pontex Polyblend CoLtd is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,020 in Pontex Polyblend CoLtd on August 31, 2024 and sell it today you would earn a total of 170.00 from holding Pontex Polyblend CoLtd or generate 8.42% 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. Pontex Polyblend CoLtd
Performance |
| Timeline |
| ESUN Financial Holding |
| Pontex Polyblend CoLtd |
ESUN Financial and Pontex Polyblend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESUN Financial and Pontex Polyblend
The main advantage of trading using opposite ESUN Financial and Pontex Polyblend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESUN Financial position performs unexpectedly, Pontex Polyblend 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 Pontex Polyblend will offset losses from the drop in Pontex Polyblend'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 |
| Pontex Polyblend vs. Cheng Shin Rubber | Pontex Polyblend vs. Nankang Rubber Tire | Pontex Polyblend vs. USI Corp | Pontex Polyblend vs. Asia Polymer 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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