Correlation Between Sun Max and Materials Analysis

Can any of the company-specific risk be diversified away by investing in both Sun Max and Materials Analysis 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 Materials Analysis 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 Materials Analysis Technology, you can compare the effects of market volatilities on Sun Max and Materials Analysis 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 Materials Analysis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Max and Materials Analysis.

Diversification Opportunities for Sun Max and Materials Analysis

-0.28

Correlation Coefficient

Sun Max  Materials Analysis

Very good diversification

The 3 months correlation between Sun and Materials is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sun Max Tech and Materials Analysis Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materials Analysis 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 Materials Analysis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materials Analysis has no effect on the direction of Sun Max i.e., Sun Max and Materials Analysis go up and down completely randomly.

Pair Corralation between Sun Max and Materials Analysis

Assuming the 90 days trading horizon Sun Max Tech is expected to generate 2.41 times more return on investment than Materials Analysis. However, Sun Max is 2.41 times more volatile than Materials Analysis Technology. It trades about -0.01 of its potential returns per unit of risk. Materials Analysis Technology is currently generating about -0.14 per unit of risk. If you would invest  5,270  in Sun Max Tech on September 24, 2024 and sell it today you would lose (80.00) from holding Sun Max Tech or give up 1.52% of portfolio value over 90 days.

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

Sun Max Tech  vs.  Materials Analysis Technology

Sun Max Tech

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Max Tech are ranked lower than 4 (%) 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.

Materials Analysis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Materials Analysis Technology 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 Sun Max and Materials Analysis

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

The idea behind Sun Max Tech and Materials Analysis 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.