Correlation Between Gold Circuit and Sunonwealth Electric

Can any of the company-specific risk be diversified away by investing in both Gold Circuit and Sunonwealth Electric 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 Gold Circuit and Sunonwealth Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gold Circuit Electronics and Sunonwealth Electric Machine, you can compare the effects of market volatilities on Gold Circuit and Sunonwealth Electric 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 Gold Circuit with a short position of Sunonwealth Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Circuit and Sunonwealth Electric.

Diversification Opportunities for Gold Circuit and Sunonwealth Electric

-0.1

Correlation Coefficient

Gold Circuit  Sunonwealth Electric

Good diversification

The 3 months correlation between Gold and Sunonwealth is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Gold Circuit Electronics and Sunonwealth Electric Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunonwealth Electric and Gold Circuit 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 Gold Circuit Electronics are associated (or correlated) with Sunonwealth Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunonwealth Electric has no effect on the direction of Gold Circuit i.e., Gold Circuit and Sunonwealth Electric go up and down completely randomly.

Pair Corralation between Gold Circuit and Sunonwealth Electric

Assuming the 90 days trading horizon Gold Circuit Electronics is expected to under-perform the Sunonwealth Electric. In addition to that, Gold Circuit is 1.18 times more volatile than Sunonwealth Electric Machine. It trades about -0.07 of its total potential returns per unit of risk. Sunonwealth Electric Machine is currently generating about -0.01 per unit of volatility. If you would invest  9,660  in Sunonwealth Electric Machine on December 29, 2024 and sell it today you would lose (280.00) from holding Sunonwealth Electric Machine or give up 2.9% of portfolio value over 90 days.

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

Gold Circuit Electronics  vs.  Sunonwealth Electric Machine

Gold Circuit Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gold Circuit Electronics 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.

Sunonwealth Electric

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sunonwealth Electric Machine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sunonwealth Electric 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 Gold Circuit and Sunonwealth Electric

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

The idea behind Gold Circuit Electronics and Sunonwealth Electric Machine 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.