Correlation Between Sinbon Electronics and Sunonwealth Electric

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

By analyzing existing cross correlation between Sinbon Electronics Co and Sunonwealth Electric Machine, you can compare the effects of market volatilities on Sinbon Electronics and Sunonwealth 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 Sinbon Electronics with a short position of Sunonwealth Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinbon Electronics and Sunonwealth Electric.

Diversification Opportunities for Sinbon Electronics and Sunonwealth Electric

-0.37

Correlation Coefficient

Sinbon Electronics  Sunonwealth Electric

Very good diversification

The 3 months correlation between Sinbon and Sunonwealth is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sinbon Electronics Co and Sunonwealth Electric Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunonwealth Electric and Sinbon 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 Sinbon Electronics Co are associated (or correlated) with Sunonwealth Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunonwealth Electric has no effect on the direction of Sinbon Electronics i.e., Sinbon Electronics and Sunonwealth Electric go up and down completely randomly.

Pair Corralation between Sinbon Electronics and Sunonwealth Electric

Assuming the 90 days trading horizon Sinbon Electronics is expected to generate 2222.0 times less return on investment than Sunonwealth Electric. But when comparing it to its historical volatility, Sinbon Electronics Co is 1.83 times less risky than Sunonwealth Electric. It trades about 0.0 of its potential returns per unit of risk. Sunonwealth Electric Machine is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,485  in Sunonwealth Electric Machine on September 13, 2024 and sell it today you would earn a total of  5,815  from holding Sunonwealth Electric Machine or generate 129.65% return on investment over 90 days.

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

Sinbon Electronics Co  vs.  Sunonwealth Electric Machine

Sinbon Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinbon Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Sunonwealth Electric

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sunonwealth Electric Machine are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sunonwealth Electric showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sinbon Electronics and Sunonwealth Electric

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

The idea behind Sinbon Electronics Co and Sunonwealth Electric Machine 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.