Correlation Between Sunrise New and Novonix

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

Diversification Opportunities for Sunrise New and Novonix

-0.11

Correlation Coefficient

Sunrise New  Novonix

Good diversification

The 3 months correlation between Sunrise and Novonix is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Sunrise New Energy and Novonix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novonix 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 Novonix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novonix has no effect on the direction of Sunrise New i.e., Sunrise New and Novonix go up and down completely randomly.

Pair Corralation between Sunrise New and Novonix

Given the investment horizon of 90 days Sunrise New Energy is expected to generate 0.81 times more return on investment than Novonix. However, Sunrise New Energy is 1.24 times less risky than Novonix. It trades about 0.09 of its potential returns per unit of risk. Novonix is currently generating about -0.05 per unit of risk. If you would invest  83.00  in Sunrise New Energy on December 27, 2024 and sell it today you would earn a total of  17.00  from holding Sunrise New Energy or generate 20.48% return on investment over 90 days.

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

Sunrise New Energy  vs.  Novonix

Sunrise New Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sunrise New Energy are ranked lower than 7 (%) 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.

Novonix

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Sunrise New and Novonix

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

The idea behind Sunrise New Energy and Novonix 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.