Correlation Between Great Sun and Juewei Food

Can any of the company-specific risk be diversified away by investing in both Great Sun and Juewei Food 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 Juewei Food 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 Juewei Food Co, you can compare the effects of market volatilities on Great Sun and Juewei Food 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 Juewei Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Sun and Juewei Food.

Diversification Opportunities for Great Sun and Juewei Food

0.95

Correlation Coefficient

Great Sun  Juewei Food

Almost no diversification

The 3 months correlation between Great and Juewei is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Great Sun Foods Co and Juewei Food Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juewei Food 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 Juewei Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juewei Food has no effect on the direction of Great Sun i.e., Great Sun and Juewei Food go up and down completely randomly.

Pair Corralation between Great Sun and Juewei Food

Assuming the 90 days trading horizon Great Sun is expected to generate 1.17 times less return on investment than Juewei Food. But when comparing it to its historical volatility, Great Sun Foods Co is 1.03 times less risky than Juewei Food. It trades about 0.2 of its potential returns per unit of risk. Juewei Food Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,242  in Juewei Food Co on September 4, 2024 and sell it today you would earn a total of  842.00  from holding Juewei Food Co or generate 67.79% return on investment over 90 days.

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

Great Sun Foods Co  vs.  Juewei Food Co

Great Sun Foods

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Great Sun Foods Co are ranked lower than 15 (%) 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.

Juewei Food

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Juewei Food Co are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Juewei Food sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Great Sun and Juewei Food

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

The idea behind Great Sun Foods Co and Juewei Food Co 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.