Correlation Between Sun Max and Ever Supreme

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

Diversification Opportunities for Sun Max and Ever Supreme

-0.24

Correlation Coefficient

Sun Max  Ever Supreme

Very good diversification

The 3 months correlation between Sun and Ever is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sun Max Tech and Ever Supreme Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ever Supreme Bio 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 Ever Supreme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ever Supreme Bio has no effect on the direction of Sun Max i.e., Sun Max and Ever Supreme go up and down completely randomly.

Pair Corralation between Sun Max and Ever Supreme

Assuming the 90 days trading horizon Sun Max Tech is expected to under-perform the Ever Supreme. In addition to that, Sun Max is 2.57 times more volatile than Ever Supreme Bio. It trades about -0.14 of its total potential returns per unit of risk. Ever Supreme Bio is currently generating about -0.1 per unit of volatility. If you would invest  18,000  in Ever Supreme Bio on October 6, 2024 and sell it today you would lose (350.00) from holding Ever Supreme Bio or give up 1.94% 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.  Ever Supreme Bio

Sun Max Tech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Max Tech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Sun Max is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ever Supreme Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ever Supreme Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Ever Supreme 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 Sun Max and Ever Supreme

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

The idea behind Sun Max Tech and Ever Supreme Bio 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.