Correlation Between Etron Technology and Sunplus Technology
Can any of the company-specific risk be diversified away by investing in both Etron Technology and Sunplus Technology 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 Etron Technology and Sunplus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Etron Technology and Sunplus Technology Co, you can compare the effects of market volatilities on Etron Technology and Sunplus Technology 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 Etron Technology with a short position of Sunplus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Etron Technology and Sunplus Technology.
Diversification Opportunities for Etron Technology and Sunplus Technology
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Etron and Sunplus is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Etron Technology and Sunplus Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunplus Technology and Etron Technology 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 Etron Technology are associated (or correlated) with Sunplus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunplus Technology has no effect on the direction of Etron Technology i.e., Etron Technology and Sunplus Technology go up and down completely randomly.
Pair Corralation between Etron Technology and Sunplus Technology
Assuming the 90 days trading horizon Etron Technology is expected to under-perform the Sunplus Technology. In addition to that, Etron Technology is 1.04 times more volatile than Sunplus Technology Co. It trades about -0.33 of its total potential returns per unit of risk. Sunplus Technology Co is currently generating about -0.13 per unit of volatility. If you would invest 2,945 in Sunplus Technology Co on November 2, 2024 and sell it today you would lose (120.00) from holding Sunplus Technology Co or give up 4.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Etron Technology vs. Sunplus Technology Co
Performance |
| Timeline |
| Etron Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Sunplus Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Etron Technology and Sunplus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Etron Technology and Sunplus Technology
The main advantage of trading using opposite Etron Technology and Sunplus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Etron Technology position performs unexpectedly, Sunplus Technology 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 Sunplus Technology will offset losses from the drop in Sunplus Technology's long position.The idea behind Etron Technology and Sunplus Technology Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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