Correlation Between Sunny Friend and Eastern Media
Can any of the company-specific risk be diversified away by investing in both Sunny Friend and Eastern Media 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 Sunny Friend and Eastern Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunny Friend Environmental and Eastern Media International, you can compare the effects of market volatilities on Sunny Friend and Eastern Media 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 Sunny Friend with a short position of Eastern Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Friend and Eastern Media.
Diversification Opportunities for Sunny Friend and Eastern Media
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sunny and Eastern is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Friend Environmental and Eastern Media International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Media Intern and Sunny Friend 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 Sunny Friend Environmental are associated (or correlated) with Eastern Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Media Intern has no effect on the direction of Sunny Friend i.e., Sunny Friend and Eastern Media go up and down completely randomly.
Pair Corralation between Sunny Friend and Eastern Media
Assuming the 90 days trading horizon Sunny Friend Environmental is expected to under-perform the Eastern Media. In addition to that, Sunny Friend is 1.54 times more volatile than Eastern Media International. It trades about -0.1 of its total potential returns per unit of risk. Eastern Media International is currently generating about -0.1 per unit of volatility. If you would invest 1,935 in Eastern Media International on August 29, 2024 and sell it today you would lose (55.00) from holding Eastern Media International or give up 2.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Friend Environmental vs. Eastern Media International
Performance |
| Timeline |
| Sunny Friend Environ |
| Eastern Media Intern |
Sunny Friend and Eastern Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Friend and Eastern Media
The main advantage of trading using opposite Sunny Friend and Eastern Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Friend position performs unexpectedly, Eastern Media 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 Eastern Media will offset losses from the drop in Eastern Media's long position.| Sunny Friend vs. Cleanaway Co | Sunny Friend vs. Taiwan Secom Co | Sunny Friend vs. ECOVE Environment Corp | Sunny Friend vs. TTET Union Corp |
| Eastern Media vs. Yang Ming Marine | Eastern Media vs. Wan Hai Lines | Eastern Media vs. U Ming Marine Transport | Eastern Media vs. Taiwan Navigation 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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