Correlation Between Sunfar Computer and Jetwell Computer

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

By analyzing existing cross correlation between Sunfar Computer Co and Jetwell Computer Co, you can compare the effects of market volatilities on Sunfar Computer and Jetwell Computer 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 Sunfar Computer with a short position of Jetwell Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunfar Computer and Jetwell Computer.

Diversification Opportunities for Sunfar Computer and Jetwell Computer

0.1

Correlation Coefficient

Sunfar Computer  Jetwell Computer

Average diversification

The 3 months correlation between Sunfar and Jetwell is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sunfar Computer Co and Jetwell Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jetwell Computer and Sunfar Computer 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 Sunfar Computer Co are associated (or correlated) with Jetwell Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jetwell Computer has no effect on the direction of Sunfar Computer i.e., Sunfar Computer and Jetwell Computer go up and down completely randomly.

Pair Corralation between Sunfar Computer and Jetwell Computer

Assuming the 90 days trading horizon Sunfar Computer Co is expected to generate 0.2 times more return on investment than Jetwell Computer. However, Sunfar Computer Co is 4.93 times less risky than Jetwell Computer. It trades about -0.01 of its potential returns per unit of risk. Jetwell Computer Co is currently generating about -0.03 per unit of risk. If you would invest  1,590  in Sunfar Computer Co on September 13, 2024 and sell it today you would lose (5.00) from holding Sunfar Computer Co or give up 0.31% of portfolio value over 90 days.

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

Sunfar Computer Co  vs.  Jetwell Computer Co

Sunfar Computer

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Sunfar Computer Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sunfar Computer is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Jetwell Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jetwell Computer Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Jetwell Computer is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sunfar Computer and Jetwell Computer

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

The idea behind Sunfar Computer Co and Jetwell Computer 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.

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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.