Correlation Between Acelon Chemicals and ESUN Financial

Can any of the company-specific risk be diversified away by investing in both Acelon Chemicals and ESUN Financial 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 Acelon Chemicals and ESUN Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Acelon Chemicals Fiber and ESUN Financial Holding, you can compare the effects of market volatilities on Acelon Chemicals and ESUN Financial 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 Acelon Chemicals with a short position of ESUN Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acelon Chemicals and ESUN Financial.

Diversification Opportunities for Acelon Chemicals and ESUN Financial

-0.33

Correlation Coefficient

Acelon Chemicals  ESUN Financial

Very good diversification

The 3 months correlation between Acelon and ESUN is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Acelon Chemicals Fiber and ESUN Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESUN Financial Holding and Acelon Chemicals 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 Acelon Chemicals Fiber are associated (or correlated) with ESUN Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESUN Financial Holding has no effect on the direction of Acelon Chemicals i.e., Acelon Chemicals and ESUN Financial go up and down completely randomly.

Pair Corralation between Acelon Chemicals and ESUN Financial

Assuming the 90 days trading horizon Acelon Chemicals Fiber is expected to under-perform the ESUN Financial. In addition to that, Acelon Chemicals is 3.94 times more volatile than ESUN Financial Holding. It trades about -0.18 of its total potential returns per unit of risk. ESUN Financial Holding is currently generating about 0.07 per unit of volatility. If you would invest  2,715  in ESUN Financial Holding on September 13, 2024 and sell it today you would earn a total of  35.00  from holding ESUN Financial Holding or generate 1.29% return on investment over 90 days.

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

Acelon Chemicals Fiber  vs.  ESUN Financial Holding

Acelon Chemicals Fiber

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Acelon Chemicals Fiber are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Acelon Chemicals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ESUN Financial Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ESUN Financial Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ESUN Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Acelon Chemicals and ESUN Financial

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

The idea behind Acelon Chemicals Fiber and ESUN Financial Holding 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.