Correlation Between Sunny Electronics and Hansol Chemica

Can any of the company-specific risk be diversified away by investing in both Sunny Electronics and Hansol Chemica 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 Sunny Electronics and Hansol Chemica into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sunny Electronics Corp and Hansol Chemica, you can compare the effects of market volatilities on Sunny Electronics and Hansol Chemica 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 Sunny Electronics with a short position of Hansol Chemica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Electronics and Hansol Chemica.

Diversification Opportunities for Sunny Electronics and Hansol Chemica

0.04

Correlation Coefficient

Sunny Electronics  Hansol Chemica

Significant diversification

The 3 months correlation between Sunny and Hansol is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Electronics Corp and Hansol Chemica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansol Chemica and Sunny Electronics 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 Sunny Electronics Corp are associated (or correlated) with Hansol Chemica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansol Chemica has no effect on the direction of Sunny Electronics i.e., Sunny Electronics and Hansol Chemica go up and down completely randomly.

Pair Corralation between Sunny Electronics and Hansol Chemica

Assuming the 90 days trading horizon Sunny Electronics Corp is expected to generate 0.52 times more return on investment than Hansol Chemica. However, Sunny Electronics Corp is 1.91 times less risky than Hansol Chemica. It trades about 0.01 of its potential returns per unit of risk. Hansol Chemica is currently generating about -0.2 per unit of risk. If you would invest  158,000  in Sunny Electronics Corp on September 4, 2024 and sell it today you would earn a total of  300.00  from holding Sunny Electronics Corp or generate 0.19% return on investment over 90 days.

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

Sunny Electronics Corp  vs.  Hansol Chemica

Sunny Electronics Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunny Electronics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sunny Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hansol Chemica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hansol Chemica 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 somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sunny Electronics and Hansol Chemica

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

The idea behind Sunny Electronics Corp and Hansol Chemica 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.