Correlation Between Sunny Friend and Insyde Software
Can any of the company-specific risk be diversified away by investing in both Sunny Friend and Insyde Software 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 Insyde Software 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 Insyde Software, you can compare the effects of market volatilities on Sunny Friend and Insyde Software 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 Insyde Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Friend and Insyde Software.
Diversification Opportunities for Sunny Friend and Insyde Software
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sunny and Insyde is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Friend Environmental and Insyde Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insyde Software 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 Insyde Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insyde Software has no effect on the direction of Sunny Friend i.e., Sunny Friend and Insyde Software go up and down completely randomly.
Pair Corralation between Sunny Friend and Insyde Software
Assuming the 90 days trading horizon Sunny Friend Environmental is expected to under-perform the Insyde Software. But the stock apears to be less risky and, when comparing its historical volatility, Sunny Friend Environmental is 2.08 times less risky than Insyde Software. The stock trades about -0.07 of its potential returns per unit of risk. The Insyde Software is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 40,550 in Insyde Software on October 26, 2024 and sell it today you would lose (450.00) from holding Insyde Software or give up 1.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Friend Environmental vs. Insyde Software
Performance |
| Timeline |
| Sunny Friend Environ |
| Insyde Software |
Sunny Friend and Insyde Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Friend and Insyde Software
The main advantage of trading using opposite Sunny Friend and Insyde Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Friend position performs unexpectedly, Insyde Software 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 Insyde Software will offset losses from the drop in Insyde Software'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 |
| Insyde Software vs. Ching Feng Home | Insyde Software vs. Mobiletron Electronics Co | Insyde Software vs. Genovate Biotechnology Co | Insyde Software vs. Golden Biotechnology |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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