Correlation Between Sunny Friend and Mitake Information

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

Diversification Opportunities for Sunny Friend and Mitake Information

-0.25

Correlation Coefficient

Sunny Friend  Mitake Information

Very good diversification

The 3 months correlation between Sunny and Mitake is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Friend Environmental and Mitake Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitake Information 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 Mitake Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitake Information has no effect on the direction of Sunny Friend i.e., Sunny Friend and Mitake Information go up and down completely randomly.

Pair Corralation between Sunny Friend and Mitake Information

Assuming the 90 days trading horizon Sunny Friend is expected to generate 1.9 times less return on investment than Mitake Information. In addition to that, Sunny Friend is 2.63 times more volatile than Mitake Information. It trades about 0.04 of its total potential returns per unit of risk. Mitake Information is currently generating about 0.2 per unit of volatility. If you would invest  6,320  in Mitake Information on September 15, 2024 and sell it today you would earn a total of  590.00  from holding Mitake Information or generate 9.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sunny Friend Environmental  vs.  Mitake Information

Sunny Friend Environ

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Friend Environmental are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Sunny Friend is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Mitake Information

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mitake Information are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Mitake Information may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sunny Friend and Mitake Information

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

The idea behind Sunny Friend Environmental and Mitake Information 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.