Correlation Between Sunko Ink and China Steel

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

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

Diversification Opportunities for Sunko Ink and China Steel

0.69

Correlation Coefficient

Sunko Ink  China Steel

Poor diversification

The 3 months correlation between Sunko and China is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sunko Ink Co and China Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Steel Corp and Sunko Ink 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 Sunko Ink Co are associated (or correlated) with China Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Steel Corp has no effect on the direction of Sunko Ink i.e., Sunko Ink and China Steel go up and down completely randomly.

Pair Corralation between Sunko Ink and China Steel

Assuming the 90 days trading horizon Sunko Ink Co is expected to generate 2.47 times more return on investment than China Steel. However, Sunko Ink is 2.47 times more volatile than China Steel Corp. It trades about 0.02 of its potential returns per unit of risk. China Steel Corp is currently generating about -0.07 per unit of risk. If you would invest  1,475  in Sunko Ink Co on September 26, 2024 and sell it today you would earn a total of  165.00  from holding Sunko Ink Co or generate 11.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.58%
Values	Daily Returns

Sunko Ink Co  vs.  China Steel Corp

Sunko Ink

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunko Ink Co 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

China Steel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Steel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Sunko Ink and China Steel

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

The idea behind Sunko Ink Co and China Steel Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.