Correlation Between Cameo Communications and Sunfon Construction

Can any of the company-specific risk be diversified away by investing in both Cameo Communications and Sunfon Construction 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 Cameo Communications and Sunfon Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cameo Communications and Sunfon Construction Co, you can compare the effects of market volatilities on Cameo Communications and Sunfon Construction 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 Cameo Communications with a short position of Sunfon Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cameo Communications and Sunfon Construction.

Diversification Opportunities for Cameo Communications and Sunfon Construction

-0.25

Correlation Coefficient

Cameo Communications  Sunfon Construction

Very good diversification

The 3 months correlation between Cameo and Sunfon is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Cameo Communications and Sunfon Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunfon Construction and Cameo Communications 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 Cameo Communications are associated (or correlated) with Sunfon Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunfon Construction has no effect on the direction of Cameo Communications i.e., Cameo Communications and Sunfon Construction go up and down completely randomly.

Pair Corralation between Cameo Communications and Sunfon Construction

Assuming the 90 days trading horizon Cameo Communications is expected to generate 1.37 times more return on investment than Sunfon Construction. However, Cameo Communications is 1.37 times more volatile than Sunfon Construction Co. It trades about 0.03 of its potential returns per unit of risk. Sunfon Construction Co is currently generating about 0.02 per unit of risk. If you would invest  985.00  in Cameo Communications on October 4, 2024 and sell it today you would earn a total of  215.00  from holding Cameo Communications or generate 21.83% return on investment over 90 days.

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

Cameo Communications  vs.  Sunfon Construction Co

Cameo Communications

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cameo Communications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cameo Communications showed solid returns over the last few months and may actually be approaching a breakup point.

Sunfon Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunfon Construction Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Cameo Communications and Sunfon Construction

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

The idea behind Cameo Communications and Sunfon Construction Co 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.