Correlation Between Sunfon Construction and Optimax Technology

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Can any of the company-specific risk be diversified away by investing in both Sunfon Construction and Optimax 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 Sunfon Construction and Optimax Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunfon Construction Co and Optimax Technology Corp, you can compare the effects of market volatilities on Sunfon Construction and Optimax 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 Sunfon Construction with a short position of Optimax Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunfon Construction and Optimax Technology.

Diversification Opportunities for Sunfon Construction and Optimax Technology

-0.71
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Sunfon and Optimax is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sunfon Construction Co and Optimax Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimax Technology Corp and Sunfon Construction 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 Sunfon Construction Co are associated (or correlated) with Optimax Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimax Technology Corp has no effect on the direction of Sunfon Construction i.e., Sunfon Construction and Optimax Technology go up and down completely randomly.

Pair Corralation between Sunfon Construction and Optimax Technology

Assuming the 90 days trading horizon Sunfon Construction is expected to generate 3.93 times less return on investment than Optimax Technology. But when comparing it to its historical volatility, Sunfon Construction Co is 1.52 times less risky than Optimax Technology. It trades about 0.02 of its potential returns per unit of risk. Optimax Technology Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,850  in Optimax Technology Corp on August 30, 2024 and sell it today you would earn a total of  1,310  from holding Optimax Technology Corp or generate 70.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Sunfon Construction Co  vs.  Optimax Technology Corp

 Performance 
       Timeline  
Sunfon Construction 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sunfon Construction Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.
Optimax Technology Corp 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Optimax Technology Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Optimax Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sunfon Construction and Optimax Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sunfon Construction and Optimax Technology

The main advantage of trading using opposite Sunfon Construction and Optimax Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunfon Construction position performs unexpectedly, Optimax 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 Optimax Technology will offset losses from the drop in Optimax Technology's long position.
The idea behind Sunfon Construction Co and Optimax Technology Corp 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.
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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