Correlation Between Sunny Friend and Wowprime Corp
Can any of the company-specific risk be diversified away by investing in both Sunny Friend and Wowprime Corp 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 Wowprime Corp 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 Wowprime Corp, you can compare the effects of market volatilities on Sunny Friend and Wowprime Corp 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 Wowprime Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Friend and Wowprime Corp.
Diversification Opportunities for Sunny Friend and Wowprime Corp
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunny and Wowprime is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Friend Environmental and Wowprime Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wowprime Corp 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 Wowprime Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wowprime Corp has no effect on the direction of Sunny Friend i.e., Sunny Friend and Wowprime Corp go up and down completely randomly.
Pair Corralation between Sunny Friend and Wowprime Corp
Assuming the 90 days trading horizon Sunny Friend Environmental is expected to under-perform the Wowprime Corp. In addition to that, Sunny Friend is 1.25 times more volatile than Wowprime Corp. It trades about -0.1 of its total potential returns per unit of risk. Wowprime Corp is currently generating about -0.04 per unit of volatility. If you would invest 23,900 in Wowprime Corp on August 29, 2024 and sell it today you would lose (400.00) from holding Wowprime Corp or give up 1.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Friend Environmental vs. Wowprime Corp
Performance |
| Timeline |
| Sunny Friend Environ |
| Wowprime Corp |
Sunny Friend and Wowprime Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Friend and Wowprime Corp
The main advantage of trading using opposite Sunny Friend and Wowprime Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Friend position performs unexpectedly, Wowprime Corp 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 Wowprime Corp will offset losses from the drop in Wowprime Corp'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 |
| Wowprime Corp vs. Yulon Finance Corp | Wowprime Corp vs. Taiwan Secom Co | Wowprime Corp vs. Pou Chen Corp | Wowprime Corp vs. Great Wall Enterprise |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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