Correlation Between Integrated Electronic and Sanan Optoelectronics

Can any of the company-specific risk be diversified away by investing in both Integrated Electronic and Sanan Optoelectronics 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 Integrated Electronic and Sanan Optoelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Integrated Electronic Systems and Sanan Optoelectronics Co, you can compare the effects of market volatilities on Integrated Electronic and Sanan Optoelectronics 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 Integrated Electronic with a short position of Sanan Optoelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integrated Electronic and Sanan Optoelectronics.

Diversification Opportunities for Integrated Electronic and Sanan Optoelectronics

0.14

Correlation Coefficient

Integrated Electronic  Sanan Optoelectronics

Average diversification

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

Pair Corralation between Integrated Electronic and Sanan Optoelectronics

Assuming the 90 days trading horizon Integrated Electronic Systems is expected to generate 1.89 times more return on investment than Sanan Optoelectronics. However, Integrated Electronic is 1.89 times more volatile than Sanan Optoelectronics Co. It trades about 0.02 of its potential returns per unit of risk. Sanan Optoelectronics Co is currently generating about -0.1 per unit of risk. If you would invest  682.00  in Integrated Electronic Systems on October 25, 2024 and sell it today you would earn a total of  0.00  from holding Integrated Electronic Systems or generate 0.0% return on investment over 90 days.

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

Integrated Electronic Systems  vs.  Sanan Optoelectronics Co

Integrated Electronic

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Integrated Electronic Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Integrated Electronic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sanan Optoelectronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sanan Optoelectronics Co 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 Integrated Electronic and Sanan Optoelectronics

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

The idea behind Integrated Electronic Systems and Sanan Optoelectronics 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.