Correlation Between Sun Max and Mechema Chemicals
Can any of the company-specific risk be diversified away by investing in both Sun Max and Mechema Chemicals 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 Mechema Chemicals 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 Mechema Chemicals Int, you can compare the effects of market volatilities on Sun Max and Mechema Chemicals 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 Mechema Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Max and Mechema Chemicals.
Diversification Opportunities for Sun Max and Mechema Chemicals
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sun and Mechema is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sun Max Tech and Mechema Chemicals Int in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mechema Chemicals Int 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 Mechema Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mechema Chemicals Int has no effect on the direction of Sun Max i.e., Sun Max and Mechema Chemicals go up and down completely randomly.
Pair Corralation between Sun Max and Mechema Chemicals
Assuming the 90 days trading horizon Sun Max Tech is expected to generate 1.11 times more return on investment than Mechema Chemicals. However, Sun Max is 1.11 times more volatile than Mechema Chemicals Int. It trades about 0.01 of its potential returns per unit of risk. Mechema Chemicals Int is currently generating about -0.03 per unit of risk. If you would invest 4,996 in Sun Max Tech on October 28, 2024 and sell it today you would lose (6.00) from holding Sun Max Tech or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Max Tech vs. Mechema Chemicals Int
Performance |
| Timeline |
| Sun Max Tech |
| Mechema Chemicals Int |
Sun Max and Mechema Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Max and Mechema Chemicals
The main advantage of trading using opposite Sun Max and Mechema Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Max position performs unexpectedly, Mechema Chemicals 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 Mechema Chemicals will offset losses from the drop in Mechema Chemicals' long position.| Sun Max vs. ASRock Inc | Sun Max vs. Ko Ja Cayman | Sun Max vs. Chenbro Micom Co | Sun Max vs. Leadtek Research |
| Mechema Chemicals vs. Coremax Corp | Mechema Chemicals vs. Taiwan Hopax Chemsistry | Mechema Chemicals vs. Delta Electronics | Mechema Chemicals vs. China Steel Chemical |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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