Correlation Between Da Cin and C Sun

Can any of the company-specific risk be diversified away by investing in both Da Cin and C Sun 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 Da Cin and C Sun into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Da Cin Construction Co and C Sun Manufacturing, you can compare the effects of market volatilities on Da Cin and C Sun 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 Da Cin with a short position of C Sun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Da Cin and C Sun.

Diversification Opportunities for Da Cin and C Sun

-0.32

Correlation Coefficient

Da Cin  C Sun

Very good diversification

The 3 months correlation between 2535 and 2467 is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Da Cin Construction Co and C Sun Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C Sun Manufacturing and Da Cin 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 Da Cin Construction Co are associated (or correlated) with C Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C Sun Manufacturing has no effect on the direction of Da Cin i.e., Da Cin and C Sun go up and down completely randomly.

Pair Corralation between Da Cin and C Sun

Assuming the 90 days trading horizon Da Cin Construction Co is expected to generate 0.24 times more return on investment than C Sun. However, Da Cin Construction Co is 4.11 times less risky than C Sun. It trades about 0.23 of its potential returns per unit of risk. C Sun Manufacturing is currently generating about -0.22 per unit of risk. If you would invest  5,230  in Da Cin Construction Co on October 20, 2024 and sell it today you would earn a total of  170.00  from holding Da Cin Construction Co or generate 3.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Da Cin Construction Co  vs.  C Sun Manufacturing

Da Cin Construction

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Da Cin Construction Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Da Cin may actually be approaching a critical reversion point that can send shares even higher in February 2025.

C Sun Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days C Sun Manufacturing 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 Da Cin and C Sun

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

The idea behind Da Cin Construction Co and C Sun Manufacturing 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.

Check out your portfolio center.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..