Correlation Between Sunny Loan and Chongqing Shunbo

Can any of the company-specific risk be diversified away by investing in both Sunny Loan and Chongqing Shunbo 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 Chongqing Shunbo 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 Chongqing Shunbo Aluminum, you can compare the effects of market volatilities on Sunny Loan and Chongqing Shunbo 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 Chongqing Shunbo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Loan and Chongqing Shunbo.

Diversification Opportunities for Sunny Loan and Chongqing Shunbo

0.69

Correlation Coefficient

Sunny Loan  Chongqing Shunbo

Poor diversification

The 3 months correlation between Sunny and Chongqing is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Loan Top and Chongqing Shunbo Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Shunbo Aluminum 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 Chongqing Shunbo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Shunbo Aluminum has no effect on the direction of Sunny Loan i.e., Sunny Loan and Chongqing Shunbo go up and down completely randomly.

Pair Corralation between Sunny Loan and Chongqing Shunbo

Assuming the 90 days trading horizon Sunny Loan Top is expected to under-perform the Chongqing Shunbo. In addition to that, Sunny Loan is 1.41 times more volatile than Chongqing Shunbo Aluminum. It trades about -0.03 of its total potential returns per unit of risk. Chongqing Shunbo Aluminum is currently generating about 0.05 per unit of volatility. If you would invest  630.00  in Chongqing Shunbo Aluminum on September 28, 2024 and sell it today you would earn a total of  41.00  from holding Chongqing Shunbo Aluminum or generate 6.51% return on investment over 90 days.

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

Sunny Loan Top  vs.  Chongqing Shunbo Aluminum

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Chongqing Shunbo Aluminum

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chongqing Shunbo Aluminum are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chongqing Shunbo may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sunny Loan and Chongqing Shunbo

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

The idea behind Sunny Loan Top and Chongqing Shunbo Aluminum 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.