Correlation Between Sunfon Construction and Green World

Can any of the company-specific risk be diversified away by investing in both Sunfon Construction and Green World 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 Sunfon Construction and Green World into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sunfon Construction Co and Green World Fintech, you can compare the effects of market volatilities on Sunfon Construction and Green World 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 Sunfon Construction with a short position of Green World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunfon Construction and Green World.

Diversification Opportunities for Sunfon Construction and Green World

0.65

Correlation Coefficient

Sunfon Construction  Green World

Poor diversification

The 3 months correlation between Sunfon and Green is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sunfon Construction Co and Green World Fintech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green World Fintech and Sunfon Construction 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 Sunfon Construction Co are associated (or correlated) with Green World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green World Fintech has no effect on the direction of Sunfon Construction i.e., Sunfon Construction and Green World go up and down completely randomly.

Pair Corralation between Sunfon Construction and Green World

Assuming the 90 days trading horizon Sunfon Construction is expected to generate 46.69 times less return on investment than Green World. But when comparing it to its historical volatility, Sunfon Construction Co is 25.64 times less risky than Green World. It trades about 0.02 of its potential returns per unit of risk. Green World Fintech is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,338  in Green World Fintech on October 21, 2024 and sell it today you would earn a total of  2,742  from holding Green World Fintech or generate 82.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Sunfon Construction Co  vs.  Green World Fintech

Sunfon Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunfon Construction 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.

Green World Fintech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Green World Fintech 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 Sunfon Construction and Green World

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

The idea behind Sunfon Construction Co and Green World Fintech 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.