Correlation Between Yuan High and Sun Max

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

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

Diversification Opportunities for Yuan High and Sun Max

-0.45

Correlation Coefficient

Yuan High  Sun Max

Very good diversification

The 3 months correlation between Yuan and Sun is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Yuan High Tech Development 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 Yuan High 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 Yuan High Tech Development 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 Yuan High i.e., Yuan High and Sun Max go up and down completely randomly.

Pair Corralation between Yuan High and Sun Max

Assuming the 90 days trading horizon Yuan High Tech Development is expected to under-perform the Sun Max. In addition to that, Yuan High is 1.15 times more volatile than Sun Max Tech. It trades about -0.02 of its total potential returns per unit of risk. Sun Max Tech is currently generating about 0.04 per unit of volatility. If you would invest  4,935  in Sun Max Tech on September 14, 2024 and sell it today you would earn a total of  165.00  from holding Sun Max Tech or generate 3.34% return on investment over 90 days.

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

Yuan High Tech Development  vs.  Sun Max Tech

Yuan High Tech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sun Max Tech

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Max Tech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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 Yuan High and Sun Max

The main advantage of trading using opposite Yuan High and Sun Max positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuan High 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 Yuan High Tech Development 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.