Correlation Between Chief Telecom and Sunny Friend
Can any of the company-specific risk be diversified away by investing in both Chief Telecom and Sunny Friend 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 Chief Telecom and Sunny Friend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chief Telecom and Sunny Friend Environmental, you can compare the effects of market volatilities on Chief Telecom and Sunny Friend 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 Chief Telecom with a short position of Sunny Friend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chief Telecom and Sunny Friend.
Diversification Opportunities for Chief Telecom and Sunny Friend
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chief and Sunny is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Chief Telecom and Sunny Friend Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Friend Environ and Chief Telecom 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 Chief Telecom are associated (or correlated) with Sunny Friend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Friend Environ has no effect on the direction of Chief Telecom i.e., Chief Telecom and Sunny Friend go up and down completely randomly.
Pair Corralation between Chief Telecom and Sunny Friend
Assuming the 90 days trading horizon Chief Telecom is expected to generate 1.43 times more return on investment than Sunny Friend. However, Chief Telecom is 1.43 times more volatile than Sunny Friend Environmental. It trades about 0.16 of its potential returns per unit of risk. Sunny Friend Environmental is currently generating about -0.13 per unit of risk. If you would invest 47,000 in Chief Telecom on September 1, 2024 and sell it today you would earn a total of 4,500 from holding Chief Telecom or generate 9.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chief Telecom vs. Sunny Friend Environmental
Performance |
| Timeline |
| Chief Telecom |
| Sunny Friend Environ |
Chief Telecom and Sunny Friend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chief Telecom and Sunny Friend
The main advantage of trading using opposite Chief Telecom and Sunny Friend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chief Telecom position performs unexpectedly, Sunny Friend 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 Sunny Friend will offset losses from the drop in Sunny Friend's long position.| Chief Telecom vs. Sunny Friend Environmental | Chief Telecom vs. Aspeed Technology | Chief Telecom vs. Standard Foods Corp | Chief Telecom vs. Realtek Semiconductor Corp |
| Sunny Friend vs. Cleanaway Co | Sunny Friend vs. Taiwan Secom Co | Sunny Friend vs. TTET Union Corp | Sunny Friend vs. Tehmag Foods |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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