Correlation Between Mechema Chemicals and Sun Max
Can any of the company-specific risk be diversified away by investing in both Mechema Chemicals and Sun Max 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 Mechema Chemicals and Sun Max into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mechema Chemicals Int and Sun Max Tech, you can compare the effects of market volatilities on Mechema Chemicals and Sun Max 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 Mechema Chemicals with a short position of Sun Max. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mechema Chemicals and Sun Max.
Diversification Opportunities for Mechema Chemicals and Sun Max
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Mechema and Sun is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Mechema Chemicals Int and Sun Max Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Max Tech and Mechema Chemicals 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 Mechema Chemicals Int are associated (or correlated) with Sun Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Max Tech has no effect on the direction of Mechema Chemicals i.e., Mechema Chemicals and Sun Max go up and down completely randomly.
Pair Corralation between Mechema Chemicals and Sun Max
Assuming the 90 days trading horizon Mechema Chemicals Int is expected to under-perform the Sun Max. But the stock apears to be less risky and, when comparing its historical volatility, Mechema Chemicals Int is 1.11 times less risky than Sun Max. The stock trades about -0.03 of its potential returns per unit of risk. The Sun Max Tech is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 4,996 in Sun Max Tech on October 28, 2024 and sell it today you would lose (6.00) from holding Sun Max Tech or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mechema Chemicals Int vs. Sun Max Tech
Performance |
| Timeline |
| Mechema Chemicals Int |
| Sun Max Tech |
Mechema Chemicals and Sun Max Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mechema Chemicals and Sun Max
The main advantage of trading using opposite Mechema Chemicals and Sun Max positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mechema Chemicals position performs unexpectedly, Sun Max 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 Sun Max will offset losses from the drop in Sun Max's long position.| Mechema Chemicals vs. Coremax Corp | Mechema Chemicals vs. Taiwan Hopax Chemsistry | Mechema Chemicals vs. Delta Electronics | Mechema Chemicals vs. China Steel Chemical |
| Sun Max vs. ASRock Inc | Sun Max vs. Ko Ja Cayman | Sun Max vs. Chenbro Micom Co | Sun Max vs. Leadtek Research |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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