Correlation Between New Hope and Great Sun
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By analyzing existing cross correlation between New Hope Dairy and Great Sun Foods Co, you can compare the effects of market volatilities on New Hope and Great Sun 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 New Hope with a short position of Great Sun. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Hope and Great Sun.
Diversification Opportunities for New Hope and Great Sun
Almost no diversification
The 3 months correlation between New and Great is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding New Hope Dairy and Great Sun Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Sun Foods and New Hope 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 New Hope Dairy are associated (or correlated) with Great Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Sun Foods has no effect on the direction of New Hope i.e., New Hope and Great Sun go up and down completely randomly.
Pair Corralation between New Hope and Great Sun
Assuming the 90 days trading horizon New Hope is expected to generate 1.18 times less return on investment than Great Sun. But when comparing it to its historical volatility, New Hope Dairy is 1.14 times less risky than Great Sun. It trades about 0.22 of its potential returns per unit of risk. Great Sun Foods Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 313.00 in Great Sun Foods Co on September 12, 2024 and sell it today you would earn a total of 203.00 from holding Great Sun Foods Co or generate 64.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
New Hope Dairy vs. Great Sun Foods Co
Performance |
Timeline |
New Hope Dairy |
Great Sun Foods |
New Hope and Great Sun Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with New Hope and Great Sun
The main advantage of trading using opposite New Hope and Great Sun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Hope position performs unexpectedly, Great Sun 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 Great Sun will offset losses from the drop in Great Sun's long position.New Hope vs. China Petroleum Chemical | New Hope vs. PetroChina Co Ltd | New Hope vs. China State Construction | New Hope vs. China Railway Group |
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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