Correlation Between Kunyue Development and Sunfar Computer
Can any of the company-specific risk be diversified away by investing in both Kunyue Development and Sunfar Computer 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 Kunyue Development and Sunfar Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kunyue Development Co and Sunfar Computer Co, you can compare the effects of market volatilities on Kunyue Development and Sunfar Computer 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 Kunyue Development with a short position of Sunfar Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kunyue Development and Sunfar Computer.
Diversification Opportunities for Kunyue Development and Sunfar Computer
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kunyue and Sunfar is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Kunyue Development Co and Sunfar Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunfar Computer and Kunyue Development 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 Kunyue Development Co are associated (or correlated) with Sunfar Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunfar Computer has no effect on the direction of Kunyue Development i.e., Kunyue Development and Sunfar Computer go up and down completely randomly.
Pair Corralation between Kunyue Development and Sunfar Computer
Assuming the 90 days trading horizon Kunyue Development Co is expected to generate 2.84 times more return on investment than Sunfar Computer. However, Kunyue Development is 2.84 times more volatile than Sunfar Computer Co. It trades about 0.1 of its potential returns per unit of risk. Sunfar Computer Co is currently generating about 0.01 per unit of risk. If you would invest 1,591 in Kunyue Development Co on August 27, 2024 and sell it today you would earn a total of 2,474 from holding Kunyue Development Co or generate 155.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kunyue Development Co vs. Sunfar Computer Co
Performance |
| Timeline |
| Kunyue Development |
| Sunfar Computer |
Kunyue Development and Sunfar Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kunyue Development and Sunfar Computer
The main advantage of trading using opposite Kunyue Development and Sunfar Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kunyue Development position performs unexpectedly, Sunfar Computer 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 Sunfar Computer will offset losses from the drop in Sunfar Computer's long position.| Kunyue Development vs. Sunfar Computer Co | Kunyue Development vs. Far EasTone Telecommunications | Kunyue Development vs. Vate Technology Co | Kunyue Development vs. Elitegroup Computer Systems |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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