Correlation Between Sunfar Computer and Provision Information

Can any of the company-specific risk be diversified away by investing in both Sunfar Computer and Provision Information 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 Provision Information 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 Provision Information CoLtd, you can compare the effects of market volatilities on Sunfar Computer and Provision Information 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 Provision Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunfar Computer and Provision Information.

Diversification Opportunities for Sunfar Computer and Provision Information

0.23

Correlation Coefficient

Sunfar Computer  Provision Information

Modest diversification

The 3 months correlation between Sunfar and Provision is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sunfar Computer Co and Provision Information CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provision Information 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 Provision Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provision Information has no effect on the direction of Sunfar Computer i.e., Sunfar Computer and Provision Information go up and down completely randomly.

Pair Corralation between Sunfar Computer and Provision Information

Assuming the 90 days trading horizon Sunfar Computer Co is expected to under-perform the Provision Information. But the stock apears to be less risky and, when comparing its historical volatility, Sunfar Computer Co is 3.24 times less risky than Provision Information. The stock trades about -0.01 of its potential returns per unit of risk. The Provision Information CoLtd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,910  in Provision Information CoLtd on September 13, 2024 and sell it today you would earn a total of  540.00  from holding Provision Information CoLtd or generate 7.81% return on investment over 90 days.

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

Sunfar Computer Co  vs.  Provision Information CoLtd

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.

Provision Information

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Provision Information CoLtd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Provision Information may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sunfar Computer and Provision Information

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

The idea behind Sunfar Computer Co and Provision Information CoLtd 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.