Correlation Between Sunwave Communications and MayAir Technology

Can any of the company-specific risk be diversified away by investing in both Sunwave Communications and MayAir Technology 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 Sunwave Communications and MayAir Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sunwave Communications Co and MayAir Technology Co, you can compare the effects of market volatilities on Sunwave Communications and MayAir Technology 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 Sunwave Communications with a short position of MayAir Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunwave Communications and MayAir Technology.

Diversification Opportunities for Sunwave Communications and MayAir Technology

-0.43

Correlation Coefficient

Sunwave Communications  MayAir Technology

Very good diversification

The 3 months correlation between Sunwave and MayAir is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sunwave Communications Co and MayAir Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MayAir Technology and Sunwave Communications 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 Sunwave Communications Co are associated (or correlated) with MayAir Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MayAir Technology has no effect on the direction of Sunwave Communications i.e., Sunwave Communications and MayAir Technology go up and down completely randomly.

Pair Corralation between Sunwave Communications and MayAir Technology

Assuming the 90 days trading horizon Sunwave Communications Co is expected to under-perform the MayAir Technology. In addition to that, Sunwave Communications is 2.8 times more volatile than MayAir Technology Co. It trades about -0.22 of its total potential returns per unit of risk. MayAir Technology Co is currently generating about -0.31 per unit of volatility. If you would invest  3,700  in MayAir Technology Co on October 12, 2024 and sell it today you would lose (451.00) from holding MayAir Technology Co or give up 12.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sunwave Communications Co  vs.  MayAir Technology Co

Sunwave Communications

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sunwave Communications Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sunwave Communications sustained solid returns over the last few months and may actually be approaching a breakup point.

MayAir Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MayAir Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sunwave Communications and MayAir Technology

The main advantage of trading using opposite Sunwave Communications and MayAir Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunwave Communications position performs unexpectedly, MayAir Technology 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 MayAir Technology will offset losses from the drop in MayAir Technology's long position.

The idea behind Sunwave Communications Co and MayAir Technology Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.