Correlation Between Sunplus Technology and Kinsus Interconnect

Can any of the company-specific risk be diversified away by investing in both Sunplus Technology and Kinsus Interconnect 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 Kinsus Interconnect 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 Kinsus Interconnect Technology, you can compare the effects of market volatilities on Sunplus Technology and Kinsus Interconnect 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 Kinsus Interconnect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunplus Technology and Kinsus Interconnect.

Diversification Opportunities for Sunplus Technology and Kinsus Interconnect

0.53

Correlation Coefficient

Sunplus Technology  Kinsus Interconnect

Very weak diversification

The 3 months correlation between Sunplus and Kinsus is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sunplus Technology Co and Kinsus Interconnect Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinsus Interconnect 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 Kinsus Interconnect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinsus Interconnect has no effect on the direction of Sunplus Technology i.e., Sunplus Technology and Kinsus Interconnect go up and down completely randomly.

Pair Corralation between Sunplus Technology and Kinsus Interconnect

Assuming the 90 days trading horizon Sunplus Technology Co is expected to under-perform the Kinsus Interconnect. But the stock apears to be less risky and, when comparing its historical volatility, Sunplus Technology Co is 1.35 times less risky than Kinsus Interconnect. The stock trades about -0.11 of its potential returns per unit of risk. The Kinsus Interconnect Technology is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  10,200  in Kinsus Interconnect Technology on December 30, 2024 and sell it today you would lose (1,210) from holding Kinsus Interconnect Technology or give up 11.86% of portfolio value over 90 days.

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

Sunplus Technology Co  vs.  Kinsus Interconnect Technology

Sunplus Technology

Risk-Adjusted Performance

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.

Kinsus Interconnect

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kinsus Interconnect Technology 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 Sunplus Technology and Kinsus Interconnect

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

The idea behind Sunplus Technology Co and Kinsus Interconnect Technology 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.