Correlation Between Sunny Loan and Hubei Yingtong

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

By analyzing existing cross correlation between Sunny Loan Top and Hubei Yingtong Telecommunication, you can compare the effects of market volatilities on Sunny Loan and Hubei Yingtong 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 Loan with a short position of Hubei Yingtong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Loan and Hubei Yingtong.

Diversification Opportunities for Sunny Loan and Hubei Yingtong

0.45

Correlation Coefficient

Sunny Loan  Hubei Yingtong

Very weak diversification

The 3 months correlation between Sunny and Hubei is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Loan Top and Hubei Yingtong Telecommunicati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubei Yingtong Telec and Sunny Loan 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 Loan Top are associated (or correlated) with Hubei Yingtong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubei Yingtong Telec has no effect on the direction of Sunny Loan i.e., Sunny Loan and Hubei Yingtong go up and down completely randomly.

Pair Corralation between Sunny Loan and Hubei Yingtong

Assuming the 90 days trading horizon Sunny Loan Top is expected to under-perform the Hubei Yingtong. But the stock apears to be less risky and, when comparing its historical volatility, Sunny Loan Top is 2.11 times less risky than Hubei Yingtong. The stock trades about 0.0 of its potential returns per unit of risk. The Hubei Yingtong Telecommunication is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,213  in Hubei Yingtong Telecommunication on October 1, 2024 and sell it today you would earn a total of  134.00  from holding Hubei Yingtong Telecommunication or generate 11.05% return on investment over 90 days.

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

Sunny Loan Top  vs.  Hubei Yingtong Telecommunicati

Sunny Loan Top

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunny Loan Top 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.

Hubei Yingtong Telec

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Sunny Loan and Hubei Yingtong

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

The idea behind Sunny Loan Top and Hubei Yingtong Telecommunication 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.