Correlation Between Sichuan Newsnet and Risesun Real

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

By analyzing existing cross correlation between Sichuan Newsnet Media and Risesun Real Estate, you can compare the effects of market volatilities on Sichuan Newsnet and Risesun Real 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 Sichuan Newsnet with a short position of Risesun Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Newsnet and Risesun Real.

Diversification Opportunities for Sichuan Newsnet and Risesun Real

0.24

Correlation Coefficient

Sichuan Newsnet  Risesun Real

Modest diversification

The 3 months correlation between Sichuan and Risesun is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Newsnet Media and Risesun Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Risesun Real Estate and Sichuan Newsnet 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 Sichuan Newsnet Media are associated (or correlated) with Risesun Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Risesun Real Estate has no effect on the direction of Sichuan Newsnet i.e., Sichuan Newsnet and Risesun Real go up and down completely randomly.

Pair Corralation between Sichuan Newsnet and Risesun Real

Assuming the 90 days trading horizon Sichuan Newsnet Media is expected to generate 1.08 times more return on investment than Risesun Real. However, Sichuan Newsnet is 1.08 times more volatile than Risesun Real Estate. It trades about 0.04 of its potential returns per unit of risk. Risesun Real Estate is currently generating about -0.11 per unit of risk. If you would invest  1,481  in Sichuan Newsnet Media on December 26, 2024 and sell it today you would earn a total of  66.00  from holding Sichuan Newsnet Media or generate 4.46% return on investment over 90 days.

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

Sichuan Newsnet Media  vs.  Risesun Real Estate

Sichuan Newsnet Media

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sichuan Newsnet Media are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sichuan Newsnet may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Risesun Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Risesun Real Estate 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sichuan Newsnet and Risesun Real

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

The idea behind Sichuan Newsnet Media and Risesun Real Estate 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.