Correlation Between Wholetech System and Sun Max

Can any of the company-specific risk be diversified away by investing in both Wholetech System and Sun Max 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 Wholetech System and Sun Max into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wholetech System Hitech and Sun Max Tech, you can compare the effects of market volatilities on Wholetech System and Sun Max 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 Wholetech System with a short position of Sun Max. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wholetech System and Sun Max.

Diversification Opportunities for Wholetech System and Sun Max

0.15

Correlation Coefficient

Wholetech System  Sun Max

Average diversification

The 3 months correlation between Wholetech and Sun is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Wholetech System Hitech and Sun Max Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Max Tech and Wholetech System 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 Wholetech System Hitech are associated (or correlated) with Sun Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Max Tech has no effect on the direction of Wholetech System i.e., Wholetech System and Sun Max go up and down completely randomly.

Pair Corralation between Wholetech System and Sun Max

Assuming the 90 days trading horizon Wholetech System Hitech is expected to under-perform the Sun Max. But the stock apears to be less risky and, when comparing its historical volatility, Wholetech System Hitech is 1.55 times less risky than Sun Max. The stock trades about -0.02 of its potential returns per unit of risk. The Sun Max Tech is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,060  in Sun Max Tech on October 1, 2024 and sell it today you would earn a total of  210.00  from holding Sun Max Tech or generate 4.15% return on investment over 90 days.

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

Wholetech System Hitech  vs.  Sun Max Tech

Wholetech System Hitech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wholetech System Hitech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Wholetech System is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sun Max Tech

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Max Tech are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sun Max may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Wholetech System and Sun Max

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

The idea behind Wholetech System Hitech and Sun Max Tech 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.