Correlation Between Acter and Sun Sea

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

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

Diversification Opportunities for Acter and Sun Sea

0.32

Correlation Coefficient

Acter  Sun Sea

Weak diversification

The 3 months correlation between Acter and Sun is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Acter Co and Sun Sea Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Sea Construction and Acter 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 Acter Co are associated (or correlated) with Sun Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Sea Construction has no effect on the direction of Acter i.e., Acter and Sun Sea go up and down completely randomly.

Pair Corralation between Acter and Sun Sea

Assuming the 90 days trading horizon Acter Co is expected to under-perform the Sun Sea. In addition to that, Acter is 3.82 times more volatile than Sun Sea Construction. It trades about -0.21 of its total potential returns per unit of risk. Sun Sea Construction is currently generating about -0.4 per unit of volatility. If you would invest  1,895  in Sun Sea Construction on December 5, 2024 and sell it today you would lose (130.00) from holding Sun Sea Construction or give up 6.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Acter Co  vs.  Sun Sea Construction

Acter

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Acter Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Acter showed solid returns over the last few months and may actually be approaching a breakup point.

Sun Sea Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Sea Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sun Sea 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 Acter and Sun Sea

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

The idea behind Acter Co and Sun Sea Construction 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.