Correlation Between Ko Ja and Sun Max

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

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

Diversification Opportunities for Ko Ja and Sun Max

-0.45

Correlation Coefficient

Ko Ja  Sun Max

Very good diversification

The 3 months correlation between 5215 and Sun is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ko Ja Cayman 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 Ko Ja 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 Ko Ja Cayman 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 Ko Ja i.e., Ko Ja and Sun Max go up and down completely randomly.

Pair Corralation between Ko Ja and Sun Max

Assuming the 90 days trading horizon Ko Ja Cayman is expected to under-perform the Sun Max. But the stock apears to be less risky and, when comparing its historical volatility, Ko Ja Cayman is 1.29 times less risky than Sun Max. The stock trades about -0.09 of its potential returns per unit of risk. The Sun Max Tech is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,865  in Sun Max Tech on September 9, 2024 and sell it today you would earn a total of  585.00  from holding Sun Max Tech or generate 12.02% return on investment over 90 days.

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

Ko Ja Cayman  vs.  Sun Max Tech

Ko Ja Cayman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ko Ja Cayman 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.

Sun Max Tech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Max Tech are ranked lower than 8 (%) 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 Ko Ja and Sun Max

The main advantage of trading using opposite Ko Ja and Sun Max positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ko Ja 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 Ko Ja Cayman 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.