Correlation Between Great Sun and Shenzhen Coship

Can any of the company-specific risk be diversified away by investing in both Great Sun and Shenzhen Coship 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 and Shenzhen Coship 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 Shenzhen Coship Electronics, you can compare the effects of market volatilities on Great Sun and Shenzhen Coship 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 with a short position of Shenzhen Coship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Sun and Shenzhen Coship.

Diversification Opportunities for Great Sun and Shenzhen Coship

-0.31

Correlation Coefficient

Great Sun  Shenzhen Coship

Very good diversification

The 3 months correlation between Great and Shenzhen is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Great Sun Foods Co and Shenzhen Coship Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Coship Elec and Great Sun 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 Shenzhen Coship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Coship Elec has no effect on the direction of Great Sun i.e., Great Sun and Shenzhen Coship go up and down completely randomly.

Pair Corralation between Great Sun and Shenzhen Coship

Assuming the 90 days trading horizon Great Sun is expected to generate 10.67 times less return on investment than Shenzhen Coship. In addition to that, Great Sun is 1.05 times more volatile than Shenzhen Coship Electronics. It trades about 0.01 of its total potential returns per unit of risk. Shenzhen Coship Electronics is currently generating about 0.1 per unit of volatility. If you would invest  183.00  in Shenzhen Coship Electronics on October 24, 2024 and sell it today you would earn a total of  467.00  from holding Shenzhen Coship Electronics or generate 255.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Great Sun Foods Co  vs.  Shenzhen Coship Electronics

Great Sun Foods

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Great Sun Foods Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Great Sun is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shenzhen Coship Elec

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Coship Electronics are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Coship sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Great Sun and Shenzhen Coship

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

The idea behind Great Sun Foods Co and Shenzhen Coship Electronics 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..