Correlation Between Sungrow Power and Hubeiyichang Transportation

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

By analyzing existing cross correlation between Sungrow Power Supply and Hubeiyichang Transportation Group, you can compare the effects of market volatilities on Sungrow Power and Hubeiyichang Transportation 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 Sungrow Power with a short position of Hubeiyichang Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungrow Power and Hubeiyichang Transportation.

Diversification Opportunities for Sungrow Power and Hubeiyichang Transportation

0.11

Correlation Coefficient

Sungrow Power  Hubeiyichang Transportation

Average diversification

The 3 months correlation between Sungrow and Hubeiyichang is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Sungrow Power Supply and Hubeiyichang Transportation Gr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubeiyichang Transportation and Sungrow Power 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 Sungrow Power Supply are associated (or correlated) with Hubeiyichang Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubeiyichang Transportation has no effect on the direction of Sungrow Power i.e., Sungrow Power and Hubeiyichang Transportation go up and down completely randomly.

Pair Corralation between Sungrow Power and Hubeiyichang Transportation

Assuming the 90 days trading horizon Sungrow Power Supply is expected to generate 1.03 times more return on investment than Hubeiyichang Transportation. However, Sungrow Power is 1.03 times more volatile than Hubeiyichang Transportation Group. It trades about 0.01 of its potential returns per unit of risk. Hubeiyichang Transportation Group is currently generating about -0.12 per unit of risk. If you would invest  7,499  in Sungrow Power Supply on October 22, 2024 and sell it today you would earn a total of  6.00  from holding Sungrow Power Supply or generate 0.08% return on investment over 90 days.

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

Sungrow Power Supply  vs.  Hubeiyichang Transportation Gr

Sungrow Power Supply

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sungrow Power Supply has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hubeiyichang Transportation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sungrow Power and Hubeiyichang Transportation

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

The idea behind Sungrow Power Supply and Hubeiyichang Transportation Group 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.