Correlation Between Allied Industrial and Sunfun Info

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

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

Diversification Opportunities for Allied Industrial and Sunfun Info

-0.09

Correlation Coefficient

Allied Industrial  Sunfun Info

Good diversification

The 3 months correlation between Allied and Sunfun is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Allied Industrial and Sunfun Info Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunfun Info and Allied Industrial 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 Allied Industrial are associated (or correlated) with Sunfun Info. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunfun Info has no effect on the direction of Allied Industrial i.e., Allied Industrial and Sunfun Info go up and down completely randomly.

Pair Corralation between Allied Industrial and Sunfun Info

Assuming the 90 days trading horizon Allied Industrial is expected to generate 2.12 times less return on investment than Sunfun Info. But when comparing it to its historical volatility, Allied Industrial is 3.43 times less risky than Sunfun Info. It trades about 0.15 of its potential returns per unit of risk. Sunfun Info Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,179  in Sunfun Info Co on October 4, 2024 and sell it today you would earn a total of  281.00  from holding Sunfun Info Co or generate 8.84% return on investment over 90 days.

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

Allied Industrial  vs.  Sunfun Info Co

Allied Industrial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Allied Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Allied Industrial is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sunfun Info

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sunfun Info Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sunfun Info showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allied Industrial and Sunfun Info

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

The idea behind Allied Industrial and Sunfun Info 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.