Correlation Between Suzhou Novoprotein and SUNSEA Telecommunicatio

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

By analyzing existing cross correlation between Suzhou Novoprotein Scientific and SUNSEA Telecommunications Co, you can compare the effects of market volatilities on Suzhou Novoprotein and SUNSEA Telecommunicatio 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 Suzhou Novoprotein with a short position of SUNSEA Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suzhou Novoprotein and SUNSEA Telecommunicatio.

Diversification Opportunities for Suzhou Novoprotein and SUNSEA Telecommunicatio

0.46

Correlation Coefficient

Suzhou Novoprotein  SUNSEA Telecommunicatio

Very weak diversification

The 3 months correlation between Suzhou and SUNSEA is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Suzhou Novoprotein Scientific and SUNSEA Telecommunications Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUNSEA Telecommunicatio and Suzhou Novoprotein 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 Suzhou Novoprotein Scientific are associated (or correlated) with SUNSEA Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUNSEA Telecommunicatio has no effect on the direction of Suzhou Novoprotein i.e., Suzhou Novoprotein and SUNSEA Telecommunicatio go up and down completely randomly.

Pair Corralation between Suzhou Novoprotein and SUNSEA Telecommunicatio

Assuming the 90 days trading horizon Suzhou Novoprotein Scientific is expected to under-perform the SUNSEA Telecommunicatio. But the stock apears to be less risky and, when comparing its historical volatility, Suzhou Novoprotein Scientific is 1.74 times less risky than SUNSEA Telecommunicatio. The stock trades about -0.04 of its potential returns per unit of risk. The SUNSEA Telecommunications Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  732.00  in SUNSEA Telecommunications Co on October 5, 2024 and sell it today you would earn a total of  115.00  from holding SUNSEA Telecommunications Co or generate 15.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.67%
Values	Daily Returns

Suzhou Novoprotein Scientific  vs.  SUNSEA Telecommunications Co

Suzhou Novoprotein

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suzhou Novoprotein Scientific 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.

SUNSEA Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SUNSEA Telecommunications Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SUNSEA Telecommunicatio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Suzhou Novoprotein and SUNSEA Telecommunicatio

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

The idea behind Suzhou Novoprotein Scientific and SUNSEA Telecommunications 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.