Correlation Between Solar Applied and Sunmax Biotechnology

Can any of the company-specific risk be diversified away by investing in both Solar Applied and Sunmax Biotechnology 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 Solar Applied and Sunmax Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Solar Applied Materials and Sunmax Biotechnology Co, you can compare the effects of market volatilities on Solar Applied and Sunmax Biotechnology 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 Solar Applied with a short position of Sunmax Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solar Applied and Sunmax Biotechnology.

Diversification Opportunities for Solar Applied and Sunmax Biotechnology

-0.08

Correlation Coefficient

Solar Applied  Sunmax Biotechnology

Good diversification

The 3 months correlation between Solar and Sunmax is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Solar Applied Materials and Sunmax Biotechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunmax Biotechnology and Solar Applied 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 Solar Applied Materials are associated (or correlated) with Sunmax Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunmax Biotechnology has no effect on the direction of Solar Applied i.e., Solar Applied and Sunmax Biotechnology go up and down completely randomly.

Pair Corralation between Solar Applied and Sunmax Biotechnology

Assuming the 90 days trading horizon Solar Applied is expected to generate 21.55 times less return on investment than Sunmax Biotechnology. In addition to that, Solar Applied is 1.03 times more volatile than Sunmax Biotechnology Co. It trades about 0.01 of its total potential returns per unit of risk. Sunmax Biotechnology Co is currently generating about 0.28 per unit of volatility. If you would invest  27,700  in Sunmax Biotechnology Co on December 23, 2024 and sell it today you would earn a total of  9,500  from holding Sunmax Biotechnology Co or generate 34.3% return on investment over 90 days.

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

Solar Applied Materials  vs.  Sunmax Biotechnology Co

Solar Applied Materials

Risk-Adjusted Performance

Very Weak

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

Sunmax Biotechnology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sunmax Biotechnology Co are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sunmax Biotechnology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solar Applied and Sunmax Biotechnology

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

The idea behind Solar Applied Materials and Sunmax Biotechnology 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.