Correlation Between Sun Sea and Chyang Sheng

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

By analyzing existing cross correlation between Sun Sea Construction and Chyang Sheng Dyeing, you can compare the effects of market volatilities on Sun Sea and Chyang Sheng 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 Sun Sea with a short position of Chyang Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Sea and Chyang Sheng.

Diversification Opportunities for Sun Sea and Chyang Sheng

0.65

Correlation Coefficient

Sun Sea  Chyang Sheng

Poor diversification

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

Pair Corralation between Sun Sea and Chyang Sheng

Assuming the 90 days trading horizon Sun Sea Construction is expected to under-perform the Chyang Sheng. In addition to that, Sun Sea is 1.56 times more volatile than Chyang Sheng Dyeing. It trades about 0.0 of its total potential returns per unit of risk. Chyang Sheng Dyeing is currently generating about 0.08 per unit of volatility. If you would invest  1,470  in Chyang Sheng Dyeing on October 25, 2024 and sell it today you would earn a total of  1,015  from holding Chyang Sheng Dyeing or generate 69.05% return on investment over 90 days.

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

Sun Sea Construction  vs.  Chyang Sheng Dyeing

Sun Sea Construction

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Sea Construction are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sun Sea may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Chyang Sheng Dyeing

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chyang Sheng Dyeing are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chyang Sheng 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 Sun Sea and Chyang Sheng

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

The idea behind Sun Sea Construction and Chyang Sheng Dyeing 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.