Correlation Between Legrand SA and Sunrise New

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

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

Diversification Opportunities for Legrand SA and Sunrise New

0.45

Correlation Coefficient

Legrand SA  Sunrise New

Very weak diversification

The 3 months correlation between Legrand and Sunrise is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Legrand SA ADR and Sunrise New Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunrise New Energy and Legrand SA 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 Legrand SA ADR are associated (or correlated) with Sunrise New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunrise New Energy has no effect on the direction of Legrand SA i.e., Legrand SA and Sunrise New go up and down completely randomly.

Pair Corralation between Legrand SA and Sunrise New

Assuming the 90 days horizon Legrand SA is expected to generate 1.82 times less return on investment than Sunrise New. But when comparing it to its historical volatility, Legrand SA ADR is 2.06 times less risky than Sunrise New. It trades about 0.08 of its potential returns per unit of risk. Sunrise New Energy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  89.00  in Sunrise New Energy on December 30, 2024 and sell it today you would earn a total of  13.00  from holding Sunrise New Energy or generate 14.61% return on investment over 90 days.

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

Legrand SA ADR  vs.  Sunrise New Energy

Legrand SA ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Legrand SA ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Legrand SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sunrise New Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sunrise New Energy are ranked lower than 5 (%) 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.

Pair Trading with Legrand SA and Sunrise New

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

The idea behind Legrand SA ADR and Sunrise New Energy 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 Stocks Directory module to find actively traded stocks across global markets.