Correlation Between Sunfun Info and FineMat Applied

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

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

Diversification Opportunities for Sunfun Info and FineMat Applied

0.33

Correlation Coefficient

Sunfun Info  FineMat Applied

Weak diversification

The 3 months correlation between Sunfun and FineMat is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sunfun Info Co and FineMat Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FineMat Applied Materials and Sunfun Info 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 Sunfun Info Co are associated (or correlated) with FineMat Applied. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FineMat Applied Materials has no effect on the direction of Sunfun Info i.e., Sunfun Info and FineMat Applied go up and down completely randomly.

Pair Corralation between Sunfun Info and FineMat Applied

Assuming the 90 days trading horizon Sunfun Info Co is expected to generate 1.61 times more return on investment than FineMat Applied. However, Sunfun Info is 1.61 times more volatile than FineMat Applied Materials. It trades about -0.07 of its potential returns per unit of risk. FineMat Applied Materials is currently generating about -0.12 per unit of risk. If you would invest  3,717  in Sunfun Info Co on December 25, 2024 and sell it today you would lose (422.00) from holding Sunfun Info Co or give up 11.35% of portfolio value over 90 days.

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

Sunfun Info Co  vs.  FineMat Applied Materials

Sunfun Info

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sunfun Info Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

FineMat Applied Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days FineMat Applied Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Sunfun Info and FineMat Applied

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

The idea behind Sunfun Info Co and FineMat Applied Materials 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 Valuation module to check real value of public entities based on technical and fundamental data.