Correlation Between XiaMen HongXin and Great Sun

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

By analyzing existing cross correlation between XiaMen HongXin Electron tech and Great Sun Foods Co, you can compare the effects of market volatilities on XiaMen HongXin and Great 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 XiaMen HongXin with a short position of Great Sun. Check out your portfolio center. Please also check ongoing floating volatility patterns of XiaMen HongXin and Great Sun.

Diversification Opportunities for XiaMen HongXin and Great Sun

-0.04

Correlation Coefficient

XiaMen HongXin  Great Sun

Good diversification

The 3 months correlation between XiaMen and Great is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding XiaMen HongXin Electron tech and Great Sun Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Sun Foods and XiaMen HongXin 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 XiaMen HongXin Electron tech are associated (or correlated) with Great Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Sun Foods has no effect on the direction of XiaMen HongXin i.e., XiaMen HongXin and Great Sun go up and down completely randomly.

Pair Corralation between XiaMen HongXin and Great Sun

Assuming the 90 days trading horizon XiaMen HongXin is expected to generate 1.88 times less return on investment than Great Sun. In addition to that, XiaMen HongXin is 1.6 times more volatile than Great Sun Foods Co. It trades about 0.01 of its total potential returns per unit of risk. Great Sun Foods Co is currently generating about 0.03 per unit of volatility. If you would invest  445.00  in Great Sun Foods Co on October 25, 2024 and sell it today you would earn a total of  6.00  from holding Great Sun Foods Co or generate 1.35% return on investment over 90 days.

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

XiaMen HongXin Electron tech  vs.  Great Sun Foods Co

XiaMen HongXin Electron

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in XiaMen HongXin Electron tech are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, XiaMen HongXin sustained solid returns over the last few months and may actually be approaching a breakup point.

Great Sun Foods

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with XiaMen HongXin and Great Sun

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

The idea behind XiaMen HongXin Electron tech and Great Sun Foods 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.