Correlation Between SUN CREATE and GUANGDONG SHUNKONG

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Can any of the company-specific risk be diversified away by investing in both SUN CREATE and GUANGDONG SHUNKONG 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 CREATE and GUANGDONG SHUNKONG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SUN CREATE ELECTRONICS and GUANGDONG SHUNKONG, you can compare the effects of market volatilities on SUN CREATE and GUANGDONG SHUNKONG 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 CREATE with a short position of GUANGDONG SHUNKONG. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUN CREATE and GUANGDONG SHUNKONG.

Diversification Opportunities for SUN CREATE and GUANGDONG SHUNKONG

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between 600990 and GUANGDONG is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SUN CREATE ELECTRONICS CO LTD and GUANGDONG SHUNKONG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUANGDONG SHUNKONG and SUN CREATE 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 CREATE ELECTRONICS are associated (or correlated) with GUANGDONG SHUNKONG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUANGDONG SHUNKONG has no effect on the direction of SUN CREATE i.e., SUN CREATE and GUANGDONG SHUNKONG go up and down completely randomly.

Pair Corralation between SUN CREATE and GUANGDONG SHUNKONG

Assuming the 90 days trading horizon SUN CREATE ELECTRONICS is expected to generate 0.82 times more return on investment than GUANGDONG SHUNKONG. However, SUN CREATE ELECTRONICS is 1.21 times less risky than GUANGDONG SHUNKONG. It trades about 0.31 of its potential returns per unit of risk. GUANGDONG SHUNKONG is currently generating about 0.12 per unit of risk. If you would invest  2,906  in SUN CREATE ELECTRONICS on August 30, 2022 and sell it today you would earn a total of  354.00  from holding SUN CREATE ELECTRONICS or generate 12.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

SUN CREATE ELECTRONICS CO LTD  vs.  GUANGDONG SHUNKONG

 Performance (%) 
       Timeline  
SUN CREATE ELECTRONICS 
600990 Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in SUN CREATE ELECTRONICS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SUN CREATE sustained solid returns over the last few months and may actually be approaching a breakup point.

600990 Price Channel

GUANGDONG SHUNKONG 
GUANGDONG Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in GUANGDONG SHUNKONG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, GUANGDONG SHUNKONG is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GUANGDONG Price Channel

SUN CREATE and GUANGDONG SHUNKONG Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SUN CREATE and GUANGDONG SHUNKONG

The main advantage of trading using opposite SUN CREATE and GUANGDONG SHUNKONG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUN CREATE position performs unexpectedly, GUANGDONG SHUNKONG 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 GUANGDONG SHUNKONG will offset losses from the drop in GUANGDONG SHUNKONG's long position.
SUN CREATE vs. GUIYANG XINTIAN PH
The idea behind SUN CREATE ELECTRONICS and GUANGDONG SHUNKONG 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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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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