Correlation Between Sunny Friend and Mayer Steel
Can any of the company-specific risk be diversified away by investing in both Sunny Friend and Mayer Steel 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 Sunny Friend and Mayer Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunny Friend Environmental and Mayer Steel Pipe, you can compare the effects of market volatilities on Sunny Friend and Mayer Steel 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 Sunny Friend with a short position of Mayer Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Friend and Mayer Steel.
Diversification Opportunities for Sunny Friend and Mayer Steel
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunny and Mayer is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Friend Environmental and Mayer Steel Pipe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayer Steel Pipe and Sunny Friend 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 Sunny Friend Environmental are associated (or correlated) with Mayer Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayer Steel Pipe has no effect on the direction of Sunny Friend i.e., Sunny Friend and Mayer Steel go up and down completely randomly.
Pair Corralation between Sunny Friend and Mayer Steel
Assuming the 90 days trading horizon Sunny Friend Environmental is expected to under-perform the Mayer Steel. But the stock apears to be less risky and, when comparing its historical volatility, Sunny Friend Environmental is 1.3 times less risky than Mayer Steel. The stock trades about -0.06 of its potential returns per unit of risk. The Mayer Steel Pipe is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,900 in Mayer Steel Pipe on December 4, 2024 and sell it today you would earn a total of 155.00 from holding Mayer Steel Pipe or generate 5.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Sunny Friend Environmental vs. Mayer Steel Pipe
Performance |
Timeline |
Sunny Friend Environ |
Mayer Steel Pipe |
Sunny Friend and Mayer Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sunny Friend and Mayer Steel
The main advantage of trading using opposite Sunny Friend and Mayer Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Friend position performs unexpectedly, Mayer Steel 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 Mayer Steel will offset losses from the drop in Mayer Steel's long position.Sunny Friend vs. Cleanaway Co | Sunny Friend vs. Taiwan Secom Co | Sunny Friend vs. ECOVE Environment Corp | Sunny Friend vs. TTET Union Corp |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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