Correlation Between Preformed Line and Sunrise New

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

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

Diversification Opportunities for Preformed Line and Sunrise New

0.09

Correlation Coefficient

Preformed Line  Sunrise New

Significant diversification

The 3 months correlation between Preformed and Sunrise is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Preformed Line Products and Sunrise New Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunrise New Energy and Preformed Line 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 Preformed Line Products are associated (or correlated) with Sunrise New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunrise New Energy has no effect on the direction of Preformed Line i.e., Preformed Line and Sunrise New go up and down completely randomly.

Pair Corralation between Preformed Line and Sunrise New

Given the investment horizon of 90 days Preformed Line Products is expected to generate 0.5 times more return on investment than Sunrise New. However, Preformed Line Products is 1.99 times less risky than Sunrise New. It trades about 0.14 of its potential returns per unit of risk. Sunrise New Energy is currently generating about -0.08 per unit of risk. If you would invest  12,171  in Preformed Line Products on February 17, 2024 and sell it today you would earn a total of  1,161  from holding Preformed Line Products or generate 9.54% return on investment over 90 days.

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

Preformed Line Products  vs.  Sunrise New Energy

Preformed Line Products

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Preformed Line Products are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Preformed Line may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Sunrise New Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunrise New Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Preformed Line and Sunrise New

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

The idea behind Preformed Line Products and Sunrise New Energy 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.