Correlation Between Channel Well and Sea Sonic
Can any of the company-specific risk be diversified away by investing in both Channel Well and Sea Sonic 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 Channel Well and Sea Sonic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Channel Well Technology and Sea Sonic Electronics, you can compare the effects of market volatilities on Channel Well and Sea Sonic 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 Channel Well with a short position of Sea Sonic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Channel Well and Sea Sonic.
Diversification Opportunities for Channel Well and Sea Sonic
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Channel and Sea is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Channel Well Technology and Sea Sonic Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea Sonic Electronics and Channel Well 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 Channel Well Technology are associated (or correlated) with Sea Sonic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea Sonic Electronics has no effect on the direction of Channel Well i.e., Channel Well and Sea Sonic go up and down completely randomly.
Pair Corralation between Channel Well and Sea Sonic
Assuming the 90 days trading horizon Channel Well Technology is expected to generate 1.09 times more return on investment than Sea Sonic. However, Channel Well is 1.09 times more volatile than Sea Sonic Electronics. It trades about 0.1 of its potential returns per unit of risk. Sea Sonic Electronics is currently generating about 0.05 per unit of risk. If you would invest 2,885 in Channel Well Technology on October 13, 2024 and sell it today you would earn a total of 5,105 from holding Channel Well Technology or generate 176.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Channel Well Technology vs. Sea Sonic Electronics
Performance |
| Timeline |
| Channel Well Technology |
| Sea Sonic Electronics |
Channel Well and Sea Sonic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Channel Well and Sea Sonic
The main advantage of trading using opposite Channel Well and Sea Sonic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Channel Well position performs unexpectedly, Sea Sonic 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 Sea Sonic will offset losses from the drop in Sea Sonic's long position.| Channel Well vs. Topco Scientific Co | Channel Well vs. Asia Vital Components | Channel Well vs. Ardentec | Channel Well vs. Adata Technology Co |
| Sea Sonic vs. Chenbro Micom Co | Sea Sonic vs. Sonix Technology Co | Sea Sonic vs. Singatron Enterprise Co | Sea Sonic vs. Scan D |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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