Correlation Between Sunrise New and Espey Mfg

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

By analyzing existing cross correlation between Sunrise New Energy and Espey Mfg Electronics, you can compare the effects of market volatilities on Sunrise New and Espey Mfg 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 Sunrise New with a short position of Espey Mfg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunrise New and Espey Mfg.

Diversification Opportunities for Sunrise New and Espey Mfg

-0.42

Correlation Coefficient

Sunrise New  Espey Mfg

Very good diversification

The 3 months correlation between Sunrise and Espey is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sunrise New Energy and Espey Mfg Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Espey Mfg Electronics and Sunrise New 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 Sunrise New Energy are associated (or correlated) with Espey Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Espey Mfg Electronics has no effect on the direction of Sunrise New i.e., Sunrise New and Espey Mfg go up and down completely randomly.

Pair Corralation between Sunrise New and Espey Mfg

Given the investment horizon of 90 days Sunrise New is expected to generate 1.84 times less return on investment than Espey Mfg. In addition to that, Sunrise New is 1.89 times more volatile than Espey Mfg Electronics. It trades about 0.04 of its total potential returns per unit of risk. Espey Mfg Electronics is currently generating about 0.14 per unit of volatility. If you would invest  2,285  in Espey Mfg Electronics on September 2, 2024 and sell it today you would earn a total of  733.00  from holding Espey Mfg Electronics or generate 32.08% return on investment over 90 days.

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

Sunrise New Energy  vs.  Espey Mfg Electronics

Sunrise New Energy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sunrise New Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Sunrise New showed solid returns over the last few months and may actually be approaching a breakup point.

Espey Mfg Electronics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Espey Mfg Electronics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Espey Mfg reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunrise New and Espey Mfg

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

The idea behind Sunrise New Energy and Espey Mfg Electronics 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.