Correlation Between Fittech and Sunonwealth Electric

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

By analyzing existing cross correlation between Fittech Co and Sunonwealth Electric Machine, you can compare the effects of market volatilities on Fittech and Sunonwealth Electric 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 Fittech with a short position of Sunonwealth Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fittech and Sunonwealth Electric.

Diversification Opportunities for Fittech and Sunonwealth Electric

0.65

Correlation Coefficient

Fittech  Sunonwealth Electric

Poor diversification

The 3 months correlation between Fittech and Sunonwealth is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Fittech Co and Sunonwealth Electric Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunonwealth Electric and Fittech 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 Fittech Co are associated (or correlated) with Sunonwealth Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunonwealth Electric has no effect on the direction of Fittech i.e., Fittech and Sunonwealth Electric go up and down completely randomly.

Pair Corralation between Fittech and Sunonwealth Electric

Assuming the 90 days trading horizon Fittech is expected to generate 2.93 times less return on investment than Sunonwealth Electric. But when comparing it to its historical volatility, Fittech Co is 1.02 times less risky than Sunonwealth Electric. It trades about 0.02 of its potential returns per unit of risk. Sunonwealth Electric Machine is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,260  in Sunonwealth Electric Machine on October 23, 2024 and sell it today you would earn a total of  5,480  from holding Sunonwealth Electric Machine or generate 128.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Fittech Co  vs.  Sunonwealth Electric Machine

Fittech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fittech Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Sunonwealth Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunonwealth Electric Machine 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 Fittech and Sunonwealth Electric

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

The idea behind Fittech Co and Sunonwealth Electric Machine 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.