Correlation Between Runjian Communication and Sunwave Communications

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Can any of the company-specific risk be diversified away by investing in both Runjian Communication and Sunwave Communications 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 Runjian Communication and Sunwave Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Runjian Communication Co and Sunwave Communications Co, you can compare the effects of market volatilities on Runjian Communication and Sunwave Communications 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 Runjian Communication with a short position of Sunwave Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Runjian Communication and Sunwave Communications.

Diversification Opportunities for Runjian Communication and Sunwave Communications

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Runjian and Sunwave is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Runjian Communication Co and Sunwave Communications Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunwave Communications and Runjian Communication 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 Runjian Communication Co are associated (or correlated) with Sunwave Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunwave Communications has no effect on the direction of Runjian Communication i.e., Runjian Communication and Sunwave Communications go up and down completely randomly.

Pair Corralation between Runjian Communication and Sunwave Communications

Assuming the 90 days trading horizon Runjian Communication is expected to generate 4.77 times less return on investment than Sunwave Communications. But when comparing it to its historical volatility, Runjian Communication Co is 1.76 times less risky than Sunwave Communications. It trades about 0.04 of its potential returns per unit of risk. Sunwave Communications Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  498.00  in Sunwave Communications Co on October 11, 2024 and sell it today you would earn a total of  173.00  from holding Sunwave Communications Co or generate 34.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Runjian Communication Co  vs.  Sunwave Communications Co

 Performance 
       Timeline  
Runjian Communication 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Runjian Communication Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Runjian Communication may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Sunwave Communications 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Sunwave Communications Co are ranked lower than 9 (%) 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.

Runjian Communication and Sunwave Communications Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Runjian Communication and Sunwave Communications

The main advantage of trading using opposite Runjian Communication and Sunwave Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Runjian Communication position performs unexpectedly, Sunwave Communications 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 Sunwave Communications will offset losses from the drop in Sunwave Communications' long position.
The idea behind Runjian Communication Co and Sunwave Communications 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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