Correlation Between Great-Sun Foods and Central Plains

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

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

Diversification Opportunities for Great-Sun Foods and Central Plains

0.63

Correlation Coefficient

Great-Sun Foods  Central Plains

Poor diversification

The 3 months correlation between Great-Sun and Central is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Great Sun Foods Co and Central Plains Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Plains Envir and Great-Sun Foods 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 Great Sun Foods Co are associated (or correlated) with Central Plains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Plains Envir has no effect on the direction of Great-Sun Foods i.e., Great-Sun Foods and Central Plains go up and down completely randomly.

Pair Corralation between Great-Sun Foods and Central Plains

Assuming the 90 days trading horizon Great Sun Foods Co is expected to generate 2.54 times more return on investment than Central Plains. However, Great-Sun Foods is 2.54 times more volatile than Central Plains Environment. It trades about 0.0 of its potential returns per unit of risk. Central Plains Environment is currently generating about -0.07 per unit of risk. If you would invest  512.00  in Great Sun Foods Co on December 4, 2024 and sell it today you would lose (10.00) from holding Great Sun Foods Co or give up 1.95% of portfolio value over 90 days.

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

Great Sun Foods Co  vs.  Central Plains Environment

Great Sun Foods

Risk-Adjusted Performance

Very Weak

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

Central Plains Envir

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Great-Sun Foods and Central Plains

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

The idea behind Great Sun Foods Co and Central Plains Environment 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.