Correlation Between Sunrise New and GrafTech International

Can any of the company-specific risk be diversified away by investing in both Sunrise New and GrafTech International 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 Sunrise New and GrafTech International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sunrise New Energy and GrafTech International, you can compare the effects of market volatilities on Sunrise New and GrafTech International 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 Sunrise New with a short position of GrafTech International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunrise New and GrafTech International.

Diversification Opportunities for Sunrise New and GrafTech International

-0.46

Correlation Coefficient

Sunrise New  GrafTech International

Very good diversification

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

Pair Corralation between Sunrise New and GrafTech International

Given the investment horizon of 90 days Sunrise New Energy is expected to generate 0.8 times more return on investment than GrafTech International. However, Sunrise New Energy is 1.25 times less risky than GrafTech International. It trades about -0.02 of its potential returns per unit of risk. GrafTech International is currently generating about -0.11 per unit of risk. If you would invest  106.00  in Sunrise New Energy on November 28, 2024 and sell it today you would lose (13.00) from holding Sunrise New Energy or give up 12.26% of portfolio value over 90 days.

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

Sunrise New Energy  vs.  GrafTech International

Sunrise New Energy

Risk-Adjusted Performance

Modest

Over the last 90 days Sunrise New Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sunrise New is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

GrafTech International

Risk-Adjusted Performance

Very Weak

Over the last 90 days GrafTech International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sunrise New and GrafTech International

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

The idea behind Sunrise New Energy and GrafTech International 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.