Correlation Between Cultural Investment and Sunny Loan

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

By analyzing existing cross correlation between Cultural Investment Holdings and Sunny Loan Top, you can compare the effects of market volatilities on Cultural Investment and Sunny Loan 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 Cultural Investment with a short position of Sunny Loan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cultural Investment and Sunny Loan.

Diversification Opportunities for Cultural Investment and Sunny Loan

0.74

Correlation Coefficient

Cultural Investment  Sunny Loan

Poor diversification

The 3 months correlation between Cultural and Sunny is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cultural Investment Holdings and Sunny Loan Top in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Loan Top and Cultural Investment 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 Cultural Investment Holdings are associated (or correlated) with Sunny Loan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Loan Top has no effect on the direction of Cultural Investment i.e., Cultural Investment and Sunny Loan go up and down completely randomly.

Pair Corralation between Cultural Investment and Sunny Loan

Assuming the 90 days trading horizon Cultural Investment Holdings is expected to generate 0.56 times more return on investment than Sunny Loan. However, Cultural Investment Holdings is 1.78 times less risky than Sunny Loan. It trades about -0.01 of its potential returns per unit of risk. Sunny Loan Top is currently generating about -0.05 per unit of risk. If you would invest  220.00  in Cultural Investment Holdings on December 26, 2024 and sell it today you would lose (5.00) from holding Cultural Investment Holdings or give up 2.27% of portfolio value over 90 days.

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

Cultural Investment Holdings  vs.  Sunny Loan Top

Cultural Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cultural Investment Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cultural Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sunny Loan Top

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sunny Loan Top has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Cultural Investment and Sunny Loan

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

The idea behind Cultural Investment Holdings and Sunny Loan Top 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.