Correlation Between Great Sun and Markor International

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

By analyzing existing cross correlation between Great Sun Foods Co and Markor International Home, you can compare the effects of market volatilities on Great Sun and Markor International 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 Great Sun with a short position of Markor International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Sun and Markor International.

Diversification Opportunities for Great Sun and Markor International

0.84

Correlation Coefficient

Great Sun  Markor International

Very poor diversification

The 3 months correlation between Great and Markor is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Great Sun Foods Co and Markor International Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markor International Home and Great Sun 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 Great Sun Foods Co are associated (or correlated) with Markor International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Markor International Home has no effect on the direction of Great Sun i.e., Great Sun and Markor International go up and down completely randomly.

Pair Corralation between Great Sun and Markor International

Assuming the 90 days trading horizon Great Sun is expected to generate 1.32 times less return on investment than Markor International. But when comparing it to its historical volatility, Great Sun Foods Co is 1.13 times less risky than Markor International. It trades about 0.1 of its potential returns per unit of risk. Markor International Home is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  154.00  in Markor International Home on September 26, 2024 and sell it today you would earn a total of  47.00  from holding Markor International Home or generate 30.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Great Sun Foods Co  vs.  Markor International Home

Great Sun Foods

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Great Sun Foods Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Great Sun sustained solid returns over the last few months and may actually be approaching a breakup point.

Markor International Home

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Markor International Home are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Markor International sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Great Sun and Markor International

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

The idea behind Great Sun Foods Co and Markor International Home 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.