Correlation Between Provision Information and Sunfar Computer

Can any of the company-specific risk be diversified away by investing in both Provision Information and Sunfar Computer 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 Provision Information and Sunfar Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Provision Information CoLtd and Sunfar Computer Co, you can compare the effects of market volatilities on Provision Information and Sunfar Computer 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 Provision Information with a short position of Sunfar Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Provision Information and Sunfar Computer.

Diversification Opportunities for Provision Information and Sunfar Computer

0.23

Correlation Coefficient

Provision Information  Sunfar Computer

Modest diversification

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

Pair Corralation between Provision Information and Sunfar Computer

Assuming the 90 days trading horizon Provision Information CoLtd is expected to generate 3.24 times more return on investment than Sunfar Computer. However, Provision Information is 3.24 times more volatile than Sunfar Computer Co. It trades about 0.08 of its potential returns per unit of risk. Sunfar Computer Co is currently generating about -0.01 per unit of risk. If you would invest  6,910  in Provision Information CoLtd on September 13, 2024 and sell it today you would earn a total of  540.00  from holding Provision Information CoLtd or generate 7.81% return on investment over 90 days.

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

Provision Information CoLtd  vs.  Sunfar Computer Co

Provision Information

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Provision Information CoLtd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Provision Information may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sunfar Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunfar Computer Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sunfar Computer 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 Provision Information and Sunfar Computer

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

The idea behind Provision Information CoLtd and Sunfar Computer 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.