Correlation Between Sunko Ink and Everlight Chemical

Can any of the company-specific risk be diversified away by investing in both Sunko Ink and Everlight Chemical 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 Sunko Ink and Everlight Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sunko Ink Co and Everlight Chemical Industrial, you can compare the effects of market volatilities on Sunko Ink and Everlight Chemical 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 Sunko Ink with a short position of Everlight Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunko Ink and Everlight Chemical.

Diversification Opportunities for Sunko Ink and Everlight Chemical

0.59

Correlation Coefficient

Sunko Ink  Everlight Chemical

Very weak diversification

The 3 months correlation between Sunko and Everlight is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sunko Ink Co and Everlight Chemical Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everlight Chemical and Sunko Ink 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 Sunko Ink Co are associated (or correlated) with Everlight Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everlight Chemical has no effect on the direction of Sunko Ink i.e., Sunko Ink and Everlight Chemical go up and down completely randomly.

Pair Corralation between Sunko Ink and Everlight Chemical

Assuming the 90 days trading horizon Sunko Ink Co is expected to generate 1.75 times more return on investment than Everlight Chemical. However, Sunko Ink is 1.75 times more volatile than Everlight Chemical Industrial. It trades about 0.06 of its potential returns per unit of risk. Everlight Chemical Industrial is currently generating about -0.03 per unit of risk. If you would invest  1,660  in Sunko Ink Co on September 7, 2024 and sell it today you would earn a total of  165.00  from holding Sunko Ink Co or generate 9.94% return on investment over 90 days.

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

Sunko Ink Co  vs.  Everlight Chemical Industrial

Sunko Ink

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sunko Ink Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sunko Ink showed solid returns over the last few months and may actually be approaching a breakup point.

Everlight Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everlight Chemical Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Everlight Chemical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sunko Ink and Everlight Chemical

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

The idea behind Sunko Ink Co and Everlight Chemical Industrial 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.