Correlation Between Great Sun and Cloud Live

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

Diversification Opportunities for Great Sun and Cloud Live

0.67

Correlation Coefficient

Great Sun  Cloud Live

Poor diversification

The 3 months correlation between Great and Cloud is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Great Sun Foods Co and Cloud Live Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloud Live Technology 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 Cloud Live. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloud Live Technology has no effect on the direction of Great Sun i.e., Great Sun and Cloud Live go up and down completely randomly.

Pair Corralation between Great Sun and Cloud Live

Assuming the 90 days trading horizon Great Sun is expected to generate 2.18 times less return on investment than Cloud Live. But when comparing it to its historical volatility, Great Sun Foods Co is 1.63 times less risky than Cloud Live. It trades about 0.06 of its potential returns per unit of risk. Cloud Live Technology is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  304.00  in Cloud Live Technology on December 25, 2024 and sell it today you would earn a total of  53.00  from holding Cloud Live Technology or generate 17.43% return on investment over 90 days.

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

Great Sun Foods Co  vs.  Cloud Live Technology

Great Sun Foods

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Great Sun Foods Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Great Sun may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Cloud Live Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cloud Live Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cloud Live sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Great Sun and Cloud Live

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

The idea behind Great Sun Foods Co and Cloud Live 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.