Correlation Between China Metal and Sunfun Info

Can any of the company-specific risk be diversified away by investing in both China Metal and Sunfun Info 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 China Metal and Sunfun Info into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Metal Products and Sunfun Info Co, you can compare the effects of market volatilities on China Metal and Sunfun Info 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 China Metal with a short position of Sunfun Info. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Metal and Sunfun Info.

Diversification Opportunities for China Metal and Sunfun Info

0.16

Correlation Coefficient

China Metal  Sunfun Info

Average diversification

The 3 months correlation between China and Sunfun is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding China Metal Products and Sunfun Info Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunfun Info and China Metal 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 China Metal Products are associated (or correlated) with Sunfun Info. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunfun Info has no effect on the direction of China Metal i.e., China Metal and Sunfun Info go up and down completely randomly.

Pair Corralation between China Metal and Sunfun Info

Assuming the 90 days trading horizon China Metal Products is expected to generate 0.27 times more return on investment than Sunfun Info. However, China Metal Products is 3.64 times less risky than Sunfun Info. It trades about -0.25 of its potential returns per unit of risk. Sunfun Info Co is currently generating about -0.11 per unit of risk. If you would invest  3,165  in China Metal Products on October 26, 2024 and sell it today you would lose (150.00) from holding China Metal Products or give up 4.74% of portfolio value over 90 days.

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

China Metal Products  vs.  Sunfun Info Co

China Metal Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Metal Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Sunfun Info

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sunfun Info Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sunfun Info showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Metal and Sunfun Info

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

The idea behind China Metal Products and Sunfun Info 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.