Correlation Between Kunyue Development and Sun Max

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

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

Diversification Opportunities for Kunyue Development and Sun Max

0.46

Correlation Coefficient

Kunyue Development  Sun Max

Very weak diversification

The 3 months correlation between Kunyue and Sun is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Kunyue Development Co 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 Kunyue Development 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 Kunyue Development Co 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 Kunyue Development i.e., Kunyue Development and Sun Max go up and down completely randomly.

Pair Corralation between Kunyue Development and Sun Max

Assuming the 90 days trading horizon Kunyue Development Co is expected to generate 0.4 times more return on investment than Sun Max. However, Kunyue Development Co is 2.5 times less risky than Sun Max. It trades about 0.15 of its potential returns per unit of risk. Sun Max Tech is currently generating about -0.06 per unit of risk. If you would invest  4,170  in Kunyue Development Co on October 9, 2024 and sell it today you would earn a total of  120.00  from holding Kunyue Development Co or generate 2.88% return on investment over 90 days.

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

Kunyue Development Co  vs.  Sun Max Tech

Kunyue Development

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kunyue Development Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kunyue Development may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sun Max Tech

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Max Tech are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sun Max may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kunyue Development and Sun Max

The main advantage of trading using opposite Kunyue Development and Sun Max positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kunyue Development 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 Kunyue Development Co 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.