Correlation Between Success Electronics and Sichuan Road

Can any of the company-specific risk be diversified away by investing in both Success Electronics and Sichuan Road 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 Success Electronics and Sichuan Road into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Success Electronics and Sichuan Road Bridge, you can compare the effects of market volatilities on Success Electronics and Sichuan Road 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 Success Electronics with a short position of Sichuan Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Success Electronics and Sichuan Road.

Diversification Opportunities for Success Electronics and Sichuan Road

0.14

Correlation Coefficient

Success Electronics  Sichuan Road

Average diversification

The 3 months correlation between Success and Sichuan is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Success Electronics and Sichuan Road Bridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Road Bridge and Success Electronics 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 Success Electronics are associated (or correlated) with Sichuan Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Road Bridge has no effect on the direction of Success Electronics i.e., Success Electronics and Sichuan Road go up and down completely randomly.

Pair Corralation between Success Electronics and Sichuan Road

Assuming the 90 days trading horizon Success Electronics is expected to generate 1.72 times more return on investment than Sichuan Road. However, Success Electronics is 1.72 times more volatile than Sichuan Road Bridge. It trades about 0.03 of its potential returns per unit of risk. Sichuan Road Bridge is currently generating about -0.07 per unit of risk. If you would invest  362.00  in Success Electronics on October 25, 2024 and sell it today you would earn a total of  8.00  from holding Success Electronics or generate 2.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Success Electronics  vs.  Sichuan Road Bridge

Success Electronics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Success Electronics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Success Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sichuan Road Bridge

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sichuan Road Bridge has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Success Electronics and Sichuan Road

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

The idea behind Success Electronics and Sichuan Road Bridge 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.