Correlation Between Crown Asia and Suntrust Home

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

By analyzing existing cross correlation between Crown Asia Chemicals and Suntrust Home Developers, you can compare the effects of market volatilities on Crown Asia and Suntrust Home 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 Crown Asia with a short position of Suntrust Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Asia and Suntrust Home.

Diversification Opportunities for Crown Asia and Suntrust Home

0.71

Correlation Coefficient

Crown Asia  Suntrust Home

Poor diversification

The 3 months correlation between Crown and Suntrust is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Crown Asia Chemicals and Suntrust Home Developers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suntrust Home Developers and Crown Asia 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 Crown Asia Chemicals are associated (or correlated) with Suntrust Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suntrust Home Developers has no effect on the direction of Crown Asia i.e., Crown Asia and Suntrust Home go up and down completely randomly.

Pair Corralation between Crown Asia and Suntrust Home

Assuming the 90 days trading horizon Crown Asia Chemicals is expected to generate 0.53 times more return on investment than Suntrust Home. However, Crown Asia Chemicals is 1.9 times less risky than Suntrust Home. It trades about 0.02 of its potential returns per unit of risk. Suntrust Home Developers is currently generating about 0.0 per unit of risk. If you would invest  145.00  in Crown Asia Chemicals on December 2, 2024 and sell it today you would earn a total of  16.00  from holding Crown Asia Chemicals or generate 11.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	78.11%
Values	Daily Returns

Crown Asia Chemicals  vs.  Suntrust Home Developers

Crown Asia Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crown Asia Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Suntrust Home Developers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Suntrust Home Developers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Crown Asia and Suntrust Home

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

The idea behind Crown Asia Chemicals and Suntrust Home Developers 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..