Correlation Between Iat Automobile and SUNSEA Telecommunicatio

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

By analyzing existing cross correlation between Iat Automobile Technology and SUNSEA Telecommunications Co, you can compare the effects of market volatilities on Iat Automobile and SUNSEA Telecommunicatio 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 Iat Automobile with a short position of SUNSEA Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iat Automobile and SUNSEA Telecommunicatio.

Diversification Opportunities for Iat Automobile and SUNSEA Telecommunicatio

0.6

Correlation Coefficient

Iat Automobile  SUNSEA Telecommunicatio

Poor diversification

The 3 months correlation between Iat and SUNSEA is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Iat Automobile Technology and SUNSEA Telecommunications Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUNSEA Telecommunicatio and Iat Automobile 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 Iat Automobile Technology are associated (or correlated) with SUNSEA Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUNSEA Telecommunicatio has no effect on the direction of Iat Automobile i.e., Iat Automobile and SUNSEA Telecommunicatio go up and down completely randomly.

Pair Corralation between Iat Automobile and SUNSEA Telecommunicatio

Assuming the 90 days trading horizon Iat Automobile is expected to generate 1.4 times less return on investment than SUNSEA Telecommunicatio. But when comparing it to its historical volatility, Iat Automobile Technology is 1.11 times less risky than SUNSEA Telecommunicatio. It trades about 0.01 of its potential returns per unit of risk. SUNSEA Telecommunications Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  941.00  in SUNSEA Telecommunications Co on October 10, 2024 and sell it today you would lose (80.00) from holding SUNSEA Telecommunications Co or give up 8.5% of portfolio value over 90 days.

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

Iat Automobile Technology  vs.  SUNSEA Telecommunications Co

Iat Automobile Technology

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Iat Automobile Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Iat Automobile may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SUNSEA Telecommunicatio

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SUNSEA Telecommunications Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SUNSEA Telecommunicatio sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iat Automobile and SUNSEA Telecommunicatio

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

The idea behind Iat Automobile Technology and SUNSEA Telecommunications 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.