Correlation Between Sunplus Technology and Meiloon Industrial

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

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

Diversification Opportunities for Sunplus Technology and Meiloon Industrial

0.42

Correlation Coefficient

Sunplus Technology  Meiloon Industrial

Very weak diversification

The 3 months correlation between Sunplus and Meiloon is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sunplus Technology Co and Meiloon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiloon Industrial and Sunplus Technology 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 Sunplus Technology Co are associated (or correlated) with Meiloon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiloon Industrial has no effect on the direction of Sunplus Technology i.e., Sunplus Technology and Meiloon Industrial go up and down completely randomly.

Pair Corralation between Sunplus Technology and Meiloon Industrial

Assuming the 90 days trading horizon Sunplus Technology is expected to generate 1.37 times less return on investment than Meiloon Industrial. In addition to that, Sunplus Technology is 1.04 times more volatile than Meiloon Industrial Co. It trades about 0.02 of its total potential returns per unit of risk. Meiloon Industrial Co is currently generating about 0.03 per unit of volatility. If you would invest  2,040  in Meiloon Industrial Co on October 23, 2024 and sell it today you would earn a total of  580.00  from holding Meiloon Industrial Co or generate 28.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Sunplus Technology Co  vs.  Meiloon Industrial Co

Sunplus Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunplus Technology Co 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.

Meiloon Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meiloon Industrial 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Sunplus Technology and Meiloon Industrial

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

The idea behind Sunplus Technology Co and Meiloon Industrial 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.