Correlation Between National Silicon and Great Sun

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

By analyzing existing cross correlation between National Silicon Industry and Great Sun Foods Co, you can compare the effects of market volatilities on National Silicon and Great Sun 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 National Silicon with a short position of Great Sun. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Silicon and Great Sun.

Diversification Opportunities for National Silicon and Great Sun

0.39

Correlation Coefficient

National Silicon  Great Sun

Weak diversification

The 3 months correlation between National and Great is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding National Silicon Industry and Great Sun Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Sun Foods and National Silicon 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 National Silicon Industry are associated (or correlated) with Great Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Sun Foods has no effect on the direction of National Silicon i.e., National Silicon and Great Sun go up and down completely randomly.

Pair Corralation between National Silicon and Great Sun

Assuming the 90 days trading horizon National Silicon Industry is expected to under-perform the Great Sun. In addition to that, National Silicon is 1.03 times more volatile than Great Sun Foods Co. It trades about -0.06 of its total potential returns per unit of risk. Great Sun Foods Co is currently generating about 0.01 per unit of volatility. If you would invest  412.00  in Great Sun Foods Co on October 7, 2024 and sell it today you would lose (8.00) from holding Great Sun Foods Co or give up 1.94% of portfolio value over 90 days.

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

National Silicon Industry  vs.  Great Sun Foods Co

National Silicon Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Silicon Industry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Great Sun Foods

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Great Sun Foods Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Great Sun is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with National Silicon and Great Sun

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

The idea behind National Silicon Industry and Great Sun Foods Co 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.