Correlation Between Sunrun and China Eastern

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

Diversification Opportunities for Sunrun and China Eastern

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between Sunrun and China is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sunrun Inc and China Eastern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Eastern Airlines and Sunrun 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 Sunrun Inc are associated (or correlated) with China Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Eastern Airlines has no effect on the direction of Sunrun i.e., Sunrun and China Eastern go up and down completely randomly.

Pair Corralation between Sunrun and China Eastern

Considering the 90-day investment horizon Sunrun Inc is expected to generate 2.5 times more return on investment than China Eastern. However, Sunrun is 2.5 times more volatile than China Eastern Airlines. It trades about 0.0 of its potential returns per unit of risk. China Eastern Airlines is currently generating about -0.01 per unit of risk. If you would invest  6,180  in Sunrun Inc on September 7, 2022 and sell it today you would lose (3,073)  from holding Sunrun Inc or give up 49.72% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sunrun Inc  vs.  China Eastern Airlines

 Performance (%) 
       Timeline  
Sunrun Inc 
Sunrun Performance
0 of 100
Over the last 90 days Sunrun Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Sunrun Price Channel

China Eastern Airlines 
China Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in China Eastern Airlines are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, China Eastern sustained solid returns over the last few months and may actually be approaching a breakup point.

China Price Channel

Sunrun and China Eastern Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sunrun and China Eastern

The main advantage of trading using opposite Sunrun and China Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunrun position performs unexpectedly, China Eastern 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 China Eastern will offset losses from the drop in China Eastern's long position.
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The idea behind Sunrun Inc and China Eastern Airlines 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 Commodity Channel Index module to use Commodity Channel Index to analyze current equity momentum.

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