Correlation Between Sunrise New and Furukawa Electric

Can any of the company-specific risk be diversified away by investing in both Sunrise New and Furukawa Electric 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 Furukawa Electric 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 Furukawa Electric Co, you can compare the effects of market volatilities on Sunrise New and Furukawa Electric 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 Furukawa Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunrise New and Furukawa Electric.

Diversification Opportunities for Sunrise New and Furukawa Electric

0.43

Correlation Coefficient

Sunrise New  Furukawa Electric

Very weak diversification

The 3 months correlation between Sunrise and Furukawa is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sunrise New Energy and Furukawa Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Furukawa Electric 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 Furukawa Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Furukawa Electric has no effect on the direction of Sunrise New i.e., Sunrise New and Furukawa Electric go up and down completely randomly.

Pair Corralation between Sunrise New and Furukawa Electric

Given the investment horizon of 90 days Sunrise New is expected to generate 6.21 times less return on investment than Furukawa Electric. In addition to that, Sunrise New is 1.32 times more volatile than Furukawa Electric Co. It trades about 0.02 of its total potential returns per unit of risk. Furukawa Electric Co is currently generating about 0.17 per unit of volatility. If you would invest  1,477  in Furukawa Electric Co on June 20, 2024 and sell it today you would earn a total of  1,272  from holding Furukawa Electric Co or generate 86.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	45.85%
Values	Daily Returns

Sunrise New Energy  vs.  Furukawa Electric Co

Sunrise New Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sunrise New Energy are ranked lower than 13 (%) 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.

Furukawa Electric

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Furukawa Electric Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Furukawa Electric is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sunrise New and Furukawa Electric

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

The idea behind Sunrise New Energy and Furukawa Electric Co 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.

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 the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.