Correlation Between Sunrise New and Eguana Technologies

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

Diversification Opportunities for Sunrise New and Eguana Technologies

0.22

Correlation Coefficient

Sunrise New  Eguana Technologies

Modest diversification

The 3 months correlation between Sunrise and Eguana is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sunrise New Energy and Eguana Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eguana Technologies 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 Eguana Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eguana Technologies has no effect on the direction of Sunrise New i.e., Sunrise New and Eguana Technologies go up and down completely randomly.

Pair Corralation between Sunrise New and Eguana Technologies

Given the investment horizon of 90 days Sunrise New is expected to generate 1.41 times less return on investment than Eguana Technologies. But when comparing it to its historical volatility, Sunrise New Energy is 1.81 times less risky than Eguana Technologies. It trades about 0.07 of its potential returns per unit of risk. Eguana Technologies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.90  in Eguana Technologies on November 29, 2024 and sell it today you would earn a total of  0.03  from holding Eguana Technologies or generate 3.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Sunrise New Energy  vs.  Eguana Technologies

Sunrise New Energy

Risk-Adjusted Performance

Very Weak

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.

Eguana Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eguana Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Eguana Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunrise New and Eguana Technologies

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

The idea behind Sunrise New Energy and Eguana Technologies 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 Transaction History module to view history of all your transactions and understand their impact on performance.