Correlation Between ASRock and Sun Max

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

By analyzing existing cross correlation between ASRock Inc and Sun Max Tech, you can compare the effects of market volatilities on ASRock and Sun Max 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 ASRock with a short position of Sun Max. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASRock and Sun Max.

Diversification Opportunities for ASRock and Sun Max

0.29

Correlation Coefficient

ASRock  Sun Max

Modest diversification

The 3 months correlation between ASRock and Sun is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding ASRock Inc and Sun Max Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Max Tech and ASRock 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 ASRock Inc are associated (or correlated) with Sun Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Max Tech has no effect on the direction of ASRock i.e., ASRock and Sun Max go up and down completely randomly.

Pair Corralation between ASRock and Sun Max

Assuming the 90 days trading horizon ASRock Inc is expected to under-perform the Sun Max. In addition to that, ASRock is 1.36 times more volatile than Sun Max Tech. It trades about -0.09 of its total potential returns per unit of risk. Sun Max Tech is currently generating about -0.02 per unit of volatility. If you would invest  5,300  in Sun Max Tech on December 29, 2024 and sell it today you would lose (160.00) from holding Sun Max Tech or give up 3.02% of portfolio value over 90 days.

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

ASRock Inc  vs.  Sun Max Tech

ASRock Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days ASRock Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Sun Max Tech

Risk-Adjusted Performance

Very Weak

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

Pair Trading with ASRock and Sun Max

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

The idea behind ASRock Inc and Sun Max Tech 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.