Correlation Between Sunrise New and Mitsubishi Electric

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

Diversification Opportunities for Sunrise New and Mitsubishi Electric

-0.53

Correlation Coefficient

Sunrise New  Mitsubishi Electric

Excellent diversification

The 3 months correlation between Sunrise and Mitsubishi is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sunrise New Energy and Mitsubishi Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Electric 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 Mitsubishi Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Electric has no effect on the direction of Sunrise New i.e., Sunrise New and Mitsubishi Electric go up and down completely randomly.

Pair Corralation between Sunrise New and Mitsubishi Electric

Given the investment horizon of 90 days Sunrise New Energy is expected to generate 1.79 times more return on investment than Mitsubishi Electric. However, Sunrise New is 1.79 times more volatile than Mitsubishi Electric. It trades about 0.04 of its potential returns per unit of risk. Mitsubishi Electric is currently generating about 0.04 per unit of risk. If you would invest  101.00  in Sunrise New Energy on September 2, 2024 and sell it today you would earn a total of  5.00  from holding Sunrise New Energy or generate 4.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Sunrise New Energy  vs.  Mitsubishi Electric

Sunrise New Energy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sunrise New Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Sunrise New showed solid returns over the last few months and may actually be approaching a breakup point.

Mitsubishi Electric

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi Electric are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Mitsubishi Electric may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sunrise New and Mitsubishi Electric

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

The idea behind Sunrise New Energy and Mitsubishi Electric 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.