Correlation Between ANJI Technology and Sea Sonic

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

By analyzing existing cross correlation between ANJI Technology Co and Sea Sonic Electronics, you can compare the effects of market volatilities on ANJI Technology and Sea Sonic 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 ANJI Technology with a short position of Sea Sonic. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANJI Technology and Sea Sonic.

Diversification Opportunities for ANJI Technology and Sea Sonic

0.39

Correlation Coefficient

ANJI Technology  Sea Sonic

Weak diversification

The 3 months correlation between ANJI and Sea is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding ANJI Technology Co and Sea Sonic Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea Sonic Electronics and ANJI 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 ANJI Technology Co are associated (or correlated) with Sea Sonic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea Sonic Electronics has no effect on the direction of ANJI Technology i.e., ANJI Technology and Sea Sonic go up and down completely randomly.

Pair Corralation between ANJI Technology and Sea Sonic

Assuming the 90 days trading horizon ANJI Technology Co is expected to generate 1.28 times more return on investment than Sea Sonic. However, ANJI Technology is 1.28 times more volatile than Sea Sonic Electronics. It trades about 0.13 of its potential returns per unit of risk. Sea Sonic Electronics is currently generating about -0.06 per unit of risk. If you would invest  3,130  in ANJI Technology Co on October 6, 2024 and sell it today you would earn a total of  270.00  from holding ANJI Technology Co or generate 8.63% return on investment over 90 days.

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

ANJI Technology Co  vs.  Sea Sonic Electronics

ANJI Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sea Sonic Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ANJI Technology and Sea Sonic

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

The idea behind ANJI Technology Co and Sea Sonic 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.