Correlation Between Sun Max and ASRock
Can any of the company-specific risk be diversified away by investing in both Sun Max and ASRock 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 Sun Max and ASRock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Max Tech and ASRock Inc, you can compare the effects of market volatilities on Sun Max and ASRock 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 Sun Max with a short position of ASRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Max and ASRock.
Diversification Opportunities for Sun Max and ASRock
Poor diversification
The 3 months correlation between Sun and ASRock is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sun Max Tech and ASRock Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASRock Inc and Sun Max 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 Sun Max Tech are associated (or correlated) with ASRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASRock Inc has no effect on the direction of Sun Max i.e., Sun Max and ASRock go up and down completely randomly.
Pair Corralation between Sun Max and ASRock
Assuming the 90 days trading horizon Sun Max is expected to generate 4.57 times less return on investment than ASRock. But when comparing it to its historical volatility, Sun Max Tech is 1.88 times less risky than ASRock. It trades about 0.08 of its potential returns per unit of risk. ASRock Inc is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 20,600 in ASRock Inc on August 30, 2024 and sell it today you would earn a total of 3,000 from holding ASRock Inc or generate 14.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Max Tech vs. ASRock Inc
Performance |
| Timeline |
| Sun Max Tech |
| ASRock Inc |
Sun Max and ASRock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Max and ASRock
The main advantage of trading using opposite Sun Max and ASRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Max position performs unexpectedly, ASRock 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 ASRock will offset losses from the drop in ASRock's long position.| Sun Max vs. ASRock Inc | Sun Max vs. Ko Ja Cayman | Sun Max vs. Chenbro Micom Co | Sun Max vs. Leadtek Research |
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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