Correlation Between Newretail and Sunfar Computer

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

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

Diversification Opportunities for Newretail and Sunfar Computer

-0.54

Correlation Coefficient

Newretail  Sunfar Computer

Excellent diversification

The 3 months correlation between Newretail and Sunfar is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Newretail Co and Sunfar Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunfar Computer and Newretail 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 Newretail Co are associated (or correlated) with Sunfar Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunfar Computer has no effect on the direction of Newretail i.e., Newretail and Sunfar Computer go up and down completely randomly.

Pair Corralation between Newretail and Sunfar Computer

Assuming the 90 days trading horizon Newretail Co is expected to generate 6.22 times more return on investment than Sunfar Computer. However, Newretail is 6.22 times more volatile than Sunfar Computer Co. It trades about 0.09 of its potential returns per unit of risk. Sunfar Computer Co is currently generating about -0.02 per unit of risk. If you would invest  1,105  in Newretail Co on October 2, 2024 and sell it today you would earn a total of  1,345  from holding Newretail Co or generate 121.72% return on investment over 90 days.

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

Newretail Co  vs.  Sunfar Computer Co

Newretail

Risk-Adjusted Performance

6 of 100

OK

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

Sunfar Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunfar Computer Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sunfar Computer is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Newretail and Sunfar Computer

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

The idea behind Newretail Co and Sunfar Computer 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 CEOs Directory module to screen CEOs from public companies around the world.