Correlation Between Sun Max and Dynamic Precision

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

Diversification Opportunities for Sun Max and Dynamic Precision

0.32

Correlation Coefficient

Sun Max  Dynamic Precision

Weak diversification

The 3 months correlation between Sun and Dynamic is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sun Max Tech and Dynamic Precision Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Precision 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 Dynamic Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Precision has no effect on the direction of Sun Max i.e., Sun Max and Dynamic Precision go up and down completely randomly.

Pair Corralation between Sun Max and Dynamic Precision

Assuming the 90 days trading horizon Sun Max Tech is expected to generate 1.92 times more return on investment than Dynamic Precision. However, Sun Max is 1.92 times more volatile than Dynamic Precision Industry. It trades about 0.08 of its potential returns per unit of risk. Dynamic Precision Industry is currently generating about -0.02 per unit of risk. If you would invest  5,190  in Sun Max Tech on December 23, 2024 and sell it today you would earn a total of  410.00  from holding Sun Max Tech or generate 7.9% return on investment over 90 days.

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

Sun Max Tech  vs.  Dynamic Precision Industry

Sun Max Tech

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Max Tech are ranked lower than 6 (%) 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 April 2025.

Dynamic Precision

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dynamic Precision Industry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Dynamic Precision 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 Dynamic Precision

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

The idea behind Sun Max Tech and Dynamic Precision Industry 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.