Correlation Between Sunfon Construction and Advanced Lithium
Can any of the company-specific risk be diversified away by investing in both Sunfon Construction and Advanced Lithium 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 Advanced Lithium 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 Advanced Lithium Electrochemistry, you can compare the effects of market volatilities on Sunfon Construction and Advanced Lithium 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 Advanced Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunfon Construction and Advanced Lithium.
Diversification Opportunities for Sunfon Construction and Advanced Lithium
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sunfon and Advanced is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sunfon Construction Co and Advanced Lithium Electrochemis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Lithium Ele 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 Advanced Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Lithium Ele has no effect on the direction of Sunfon Construction i.e., Sunfon Construction and Advanced Lithium go up and down completely randomly.
Pair Corralation between Sunfon Construction and Advanced Lithium
Assuming the 90 days trading horizon Sunfon Construction Co is expected to under-perform the Advanced Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Sunfon Construction Co is 4.42 times less risky than Advanced Lithium. The stock trades about -0.09 of its potential returns per unit of risk. The Advanced Lithium Electrochemistry is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,750 in Advanced Lithium Electrochemistry on September 1, 2024 and sell it today you would earn a total of 550.00 from holding Advanced Lithium Electrochemistry or generate 14.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunfon Construction Co vs. Advanced Lithium Electrochemis
Performance |
| Timeline |
| Sunfon Construction |
| Advanced Lithium Ele |
Sunfon Construction and Advanced Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunfon Construction and Advanced Lithium
The main advantage of trading using opposite Sunfon Construction and Advanced Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunfon Construction position performs unexpectedly, Advanced Lithium 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 Advanced Lithium will offset losses from the drop in Advanced Lithium's long position.| Sunfon Construction vs. United Radiant Technology | Sunfon Construction vs. Microtips Technology | Sunfon Construction vs. Dadi Early Childhood Education | Sunfon Construction vs. China Times Publishing |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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