Correlation Between Simplo Technology and ESUN Financial
Can any of the company-specific risk be diversified away by investing in both Simplo Technology and ESUN Financial 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 Simplo Technology and ESUN Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simplo Technology Co and ESUN Financial Holding, you can compare the effects of market volatilities on Simplo Technology and ESUN Financial 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 Simplo Technology with a short position of ESUN Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplo Technology and ESUN Financial.
Diversification Opportunities for Simplo Technology and ESUN Financial
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Simplo and ESUN is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Simplo Technology Co and ESUN Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESUN Financial Holding and Simplo 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 Simplo Technology Co are associated (or correlated) with ESUN Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESUN Financial Holding has no effect on the direction of Simplo Technology i.e., Simplo Technology and ESUN Financial go up and down completely randomly.
Pair Corralation between Simplo Technology and ESUN Financial
Assuming the 90 days trading horizon Simplo Technology Co is expected to generate 2.92 times more return on investment than ESUN Financial. However, Simplo Technology is 2.92 times more volatile than ESUN Financial Holding. It trades about 0.14 of its potential returns per unit of risk. ESUN Financial Holding is currently generating about -0.01 per unit of risk. If you would invest 34,250 in Simplo Technology Co on August 31, 2024 and sell it today you would earn a total of 2,900 from holding Simplo Technology Co or generate 8.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simplo Technology Co vs. ESUN Financial Holding
Performance |
| Timeline |
| Simplo Technology |
| ESUN Financial Holding |
Simplo Technology and ESUN Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simplo Technology and ESUN Financial
The main advantage of trading using opposite Simplo Technology and ESUN Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simplo Technology position performs unexpectedly, ESUN Financial 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 ESUN Financial will offset losses from the drop in ESUN Financial's long position.| Simplo Technology vs. Dynapack International Technology | Simplo Technology vs. Catcher Technology Co | Simplo Technology vs. Delta Electronics | Simplo Technology vs. Powertech Technology |
| ESUN Financial vs. Central Reinsurance Corp | ESUN Financial vs. Huaku Development Co | ESUN Financial vs. Fubon Financial Holding | ESUN Financial vs. Chailease Holding Co |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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