Correlation Between Sunny Loan and Guangzhou KingTeller

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

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

Diversification Opportunities for Sunny Loan and Guangzhou KingTeller

0.48

Correlation Coefficient

Sunny Loan  Guangzhou KingTeller

Very weak diversification

The 3 months correlation between Sunny and Guangzhou is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Loan Top and Guangzhou KingTeller Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou KingTeller and Sunny Loan 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 Sunny Loan Top are associated (or correlated) with Guangzhou KingTeller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou KingTeller has no effect on the direction of Sunny Loan i.e., Sunny Loan and Guangzhou KingTeller go up and down completely randomly.

Pair Corralation between Sunny Loan and Guangzhou KingTeller

Assuming the 90 days trading horizon Sunny Loan Top is expected to under-perform the Guangzhou KingTeller. But the stock apears to be less risky and, when comparing its historical volatility, Sunny Loan Top is 1.17 times less risky than Guangzhou KingTeller. The stock trades about -0.09 of its potential returns per unit of risk. The Guangzhou KingTeller Technology is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  480.00  in Guangzhou KingTeller Technology on October 6, 2024 and sell it today you would lose (60.00) from holding Guangzhou KingTeller Technology or give up 12.5% of portfolio value over 90 days.

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

Sunny Loan Top  vs.  Guangzhou KingTeller Technolog

Sunny Loan Top

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Guangzhou KingTeller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guangzhou KingTeller Technology 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 Sunny Loan and Guangzhou KingTeller

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

The idea behind Sunny Loan Top and Guangzhou KingTeller Technology 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.