Correlation Between Sunwoda Electronic and Industrial

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

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

Diversification Opportunities for Sunwoda Electronic and Industrial

0.18

Correlation Coefficient

Sunwoda Electronic  Industrial

Average diversification

The 3 months correlation between Sunwoda and Industrial is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sunwoda Electronic and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial and Sunwoda Electronic 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 Sunwoda Electronic are associated (or correlated) with Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of Sunwoda Electronic i.e., Sunwoda Electronic and Industrial go up and down completely randomly.

Pair Corralation between Sunwoda Electronic and Industrial

Assuming the 90 days trading horizon Sunwoda Electronic is expected to generate 1.28 times less return on investment than Industrial. In addition to that, Sunwoda Electronic is 1.76 times more volatile than Industrial and Commercial. It trades about 0.02 of its total potential returns per unit of risk. Industrial and Commercial is currently generating about 0.05 per unit of volatility. If you would invest  667.00  in Industrial and Commercial on December 10, 2024 and sell it today you would earn a total of  7.00  from holding Industrial and Commercial or generate 1.05% return on investment over 90 days.

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

Sunwoda Electronic  vs.  Industrial and Commercial

Sunwoda Electronic

Risk-Adjusted Performance

Weak

Over the last 90 days Sunwoda Electronic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sunwoda Electronic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Industrial and Commercial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sunwoda Electronic and Industrial

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

The idea behind Sunwoda Electronic and Industrial and Commercial 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.