Correlation Between Sun Max and ASRock

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

By analyzing existing cross correlation between Sun Max Tech and ASRock Inc, you can compare the effects of market volatilities on Sun Max and ASRock 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 Sun Max with a short position of ASRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Max and ASRock.

Diversification Opportunities for Sun Max and ASRock

0.68

Correlation Coefficient

Sun Max  ASRock

Poor diversification

The 3 months correlation between Sun and ASRock is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sun Max Tech and ASRock Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASRock Inc and Sun Max 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 Sun Max Tech are associated (or correlated) with ASRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASRock Inc has no effect on the direction of Sun Max i.e., Sun Max and ASRock go up and down completely randomly.

Pair Corralation between Sun Max and ASRock

Assuming the 90 days trading horizon Sun Max Tech is expected to under-perform the ASRock. In addition to that, Sun Max is 1.11 times more volatile than ASRock Inc. It trades about -0.01 of its total potential returns per unit of risk. ASRock Inc is currently generating about 0.1 per unit of volatility. If you would invest  23,500  in ASRock Inc on September 15, 2024 and sell it today you would earn a total of  1,100  from holding ASRock Inc or generate 4.68% return on investment over 90 days.

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

Sun Max Tech  vs.  ASRock Inc

Sun Max Tech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Max Tech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Sun Max is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

ASRock Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASRock Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ASRock showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sun Max and ASRock

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

The idea behind Sun Max Tech and ASRock Inc 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.