Correlation Between Sunny Loan and Jason Furniture

Can any of the company-specific risk be diversified away by investing in both Sunny Loan and Jason Furniture 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 Jason Furniture 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 Jason Furniture, you can compare the effects of market volatilities on Sunny Loan and Jason Furniture 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 Jason Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Loan and Jason Furniture.

Diversification Opportunities for Sunny Loan and Jason Furniture

0.45

Correlation Coefficient

Sunny Loan  Jason Furniture

Very weak diversification

The 3 months correlation between Sunny and Jason is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Loan Top and Jason Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jason Furniture 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 Jason Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jason Furniture has no effect on the direction of Sunny Loan i.e., Sunny Loan and Jason Furniture go up and down completely randomly.

Pair Corralation between Sunny Loan and Jason Furniture

Assuming the 90 days trading horizon Sunny Loan Top is expected to under-perform the Jason Furniture. In addition to that, Sunny Loan is 1.58 times more volatile than Jason Furniture. It trades about -0.04 of its total potential returns per unit of risk. Jason Furniture is currently generating about -0.02 per unit of volatility. If you would invest  2,795  in Jason Furniture on December 25, 2024 and sell it today you would lose (95.00) from holding Jason Furniture or give up 3.4% 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.  Jason Furniture

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.

Jason Furniture

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Sunny Loan and Jason Furniture

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

The idea behind Sunny Loan Top and Jason Furniture 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..