Correlation Between Ability Enterprise and Sunplus Technology

Can any of the company-specific risk be diversified away by investing in both Ability Enterprise and Sunplus Technology 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 Ability Enterprise and Sunplus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ability Enterprise Co and Sunplus Technology Co, you can compare the effects of market volatilities on Ability Enterprise and Sunplus Technology 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 Ability Enterprise with a short position of Sunplus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ability Enterprise and Sunplus Technology.

Diversification Opportunities for Ability Enterprise and Sunplus Technology

0.34

Correlation Coefficient

Ability Enterprise  Sunplus Technology

Weak diversification

The 3 months correlation between Ability and Sunplus is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ability Enterprise Co and Sunplus Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunplus Technology and Ability Enterprise 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 Ability Enterprise Co are associated (or correlated) with Sunplus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunplus Technology has no effect on the direction of Ability Enterprise i.e., Ability Enterprise and Sunplus Technology go up and down completely randomly.

Pair Corralation between Ability Enterprise and Sunplus Technology

Assuming the 90 days trading horizon Ability Enterprise Co is expected to generate 1.36 times more return on investment than Sunplus Technology. However, Ability Enterprise is 1.36 times more volatile than Sunplus Technology Co. It trades about 0.16 of its potential returns per unit of risk. Sunplus Technology Co is currently generating about 0.04 per unit of risk. If you would invest  4,620  in Ability Enterprise Co on December 2, 2024 and sell it today you would earn a total of  1,550  from holding Ability Enterprise Co or generate 33.55% return on investment over 90 days.

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

Ability Enterprise Co  vs.  Sunplus Technology Co

Ability Enterprise

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ability Enterprise Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ability Enterprise showed solid returns over the last few months and may actually be approaching a breakup point.

Sunplus Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sunplus Technology Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sunplus Technology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ability Enterprise and Sunplus Technology

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

The idea behind Ability Enterprise Co and Sunplus Technology 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.