Correlation Between Dexon Technology and Sun Vending

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

By analyzing existing cross correlation between Dexon Technology PCL and Sun Vending Technology, you can compare the effects of market volatilities on Dexon Technology and Sun Vending 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 Dexon Technology with a short position of Sun Vending. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dexon Technology and Sun Vending.

Diversification Opportunities for Dexon Technology and Sun Vending

0.36

Correlation Coefficient

Dexon Technology  Sun Vending

Weak diversification

The 3 months correlation between Dexon and Sun is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Dexon Technology PCL and Sun Vending Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Vending Technology and Dexon Technology 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 Dexon Technology PCL are associated (or correlated) with Sun Vending. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Vending Technology has no effect on the direction of Dexon Technology i.e., Dexon Technology and Sun Vending go up and down completely randomly.

Pair Corralation between Dexon Technology and Sun Vending

Assuming the 90 days trading horizon Dexon Technology PCL is expected to generate 1.84 times more return on investment than Sun Vending. However, Dexon Technology is 1.84 times more volatile than Sun Vending Technology. It trades about 0.01 of its potential returns per unit of risk. Sun Vending Technology is currently generating about 0.0 per unit of risk. If you would invest  140.00  in Dexon Technology PCL on December 21, 2024 and sell it today you would earn a total of  0.00  from holding Dexon Technology PCL or generate 0.0% return on investment over 90 days.

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

Dexon Technology PCL  vs.  Sun Vending Technology

Dexon Technology PCL

Risk-Adjusted Performance

Weak

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

Sun Vending Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Vending Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Sun Vending is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Dexon Technology and Sun Vending

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

The idea behind Dexon Technology PCL and Sun Vending Technology 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.