Correlation Between Sun Max and Dynapack International

Can any of the company-specific risk be diversified away by investing in both Sun Max and Dynapack International 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 Sun Max and Dynapack International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sun Max Tech and Dynapack International Technology, you can compare the effects of market volatilities on Sun Max and Dynapack International 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 Sun Max with a short position of Dynapack International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Max and Dynapack International.

Diversification Opportunities for Sun Max and Dynapack International

0.69

Correlation Coefficient

Sun Max  Dynapack International

Poor diversification

The 3 months correlation between Sun and Dynapack is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sun Max Tech and Dynapack International Technol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynapack International and Sun Max 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 Sun Max Tech are associated (or correlated) with Dynapack International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynapack International has no effect on the direction of Sun Max i.e., Sun Max and Dynapack International go up and down completely randomly.

Pair Corralation between Sun Max and Dynapack International

Assuming the 90 days trading horizon Sun Max is expected to generate 6.79 times less return on investment than Dynapack International. But when comparing it to its historical volatility, Sun Max Tech is 2.01 times less risky than Dynapack International. It trades about 0.11 of its potential returns per unit of risk. Dynapack International Technology is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  9,990  in Dynapack International Technology on September 4, 2024 and sell it today you would earn a total of  10,610  from holding Dynapack International Technology or generate 106.21% return on investment over 90 days.

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

Sun Max Tech  vs.  Dynapack International Technol

Sun Max Tech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Max Tech are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sun Max may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dynapack International

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Dynapack International Technology are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Dynapack International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sun Max and Dynapack International

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

The idea behind Sun Max Tech and Dynapack International 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.