Correlation Between Sunmax Biotechnology and Lumax International

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

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

Diversification Opportunities for Sunmax Biotechnology and Lumax International

-0.62

Correlation Coefficient

Sunmax Biotechnology  Lumax International

Excellent diversification

The 3 months correlation between Sunmax and Lumax is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sunmax Biotechnology Co and Lumax International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumax International Corp and Sunmax Biotechnology 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 Sunmax Biotechnology Co are associated (or correlated) with Lumax International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumax International Corp has no effect on the direction of Sunmax Biotechnology i.e., Sunmax Biotechnology and Lumax International go up and down completely randomly.

Pair Corralation between Sunmax Biotechnology and Lumax International

Assuming the 90 days trading horizon Sunmax Biotechnology Co is expected to under-perform the Lumax International. But the stock apears to be less risky and, when comparing its historical volatility, Sunmax Biotechnology Co is 1.46 times less risky than Lumax International. The stock trades about -0.08 of its potential returns per unit of risk. The Lumax International Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  10,700  in Lumax International Corp on October 9, 2024 and sell it today you would earn a total of  450.00  from holding Lumax International Corp or generate 4.21% return on investment over 90 days.

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

Sunmax Biotechnology Co  vs.  Lumax International Corp

Sunmax Biotechnology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sunmax Biotechnology Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sunmax Biotechnology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Lumax International Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lumax International Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Lumax International 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 Sunmax Biotechnology and Lumax International

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

The idea behind Sunmax Biotechnology Co and Lumax International Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.