Correlation Between Polytronics Technology and Sunonwealth Electric

Can any of the company-specific risk be diversified away by investing in both Polytronics Technology and Sunonwealth Electric 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 Polytronics Technology and Sunonwealth Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Polytronics Technology Corp and Sunonwealth Electric Machine, you can compare the effects of market volatilities on Polytronics Technology and Sunonwealth Electric 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 Polytronics Technology with a short position of Sunonwealth Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polytronics Technology and Sunonwealth Electric.

Diversification Opportunities for Polytronics Technology and Sunonwealth Electric

0.23

Correlation Coefficient

Polytronics Technology  Sunonwealth Electric

Modest diversification

The 3 months correlation between Polytronics and Sunonwealth is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Polytronics Technology Corp and Sunonwealth Electric Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunonwealth Electric and Polytronics Technology 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 Polytronics Technology Corp are associated (or correlated) with Sunonwealth Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunonwealth Electric has no effect on the direction of Polytronics Technology i.e., Polytronics Technology and Sunonwealth Electric go up and down completely randomly.

Pair Corralation between Polytronics Technology and Sunonwealth Electric

Assuming the 90 days trading horizon Polytronics Technology Corp is expected to under-perform the Sunonwealth Electric. In addition to that, Polytronics Technology is 1.26 times more volatile than Sunonwealth Electric Machine. It trades about -0.03 of its total potential returns per unit of risk. Sunonwealth Electric Machine is currently generating about 0.06 per unit of volatility. If you would invest  9,410  in Sunonwealth Electric Machine on September 15, 2024 and sell it today you would earn a total of  790.00  from holding Sunonwealth Electric Machine or generate 8.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Polytronics Technology Corp  vs.  Sunonwealth Electric Machine

Polytronics Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polytronics Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Polytronics Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sunonwealth Electric

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sunonwealth Electric Machine are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sunonwealth Electric may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Polytronics Technology and Sunonwealth Electric

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

The idea behind Polytronics Technology Corp and Sunonwealth Electric Machine 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.