Correlation Between Sharps Compliance and China Everbright

Can any of the company-specific risk be diversified away by investing in both Sharps Compliance and China Everbright 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 Sharps Compliance and China Everbright into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sharps Compliance Corp and China Everbright Water, you can compare the effects of market volatilities on Sharps Compliance and China Everbright 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 Sharps Compliance with a short position of China Everbright. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sharps Compliance and China Everbright.

Diversification Opportunities for Sharps Compliance and China Everbright

0.0

Correlation Coefficient

Sharps Compliance  China Everbright

Pay attention - limited upside

The 3 months correlation between Sharps and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sharps Compliance Corp and China Everbright Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Everbright Water and Sharps Compliance 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 Sharps Compliance Corp are associated (or correlated) with China Everbright. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Everbright Water has no effect on the direction of Sharps Compliance i.e., Sharps Compliance and China Everbright go up and down completely randomly.

Pair Corralation between Sharps Compliance and China Everbright

If you would invest (100.00) in Sharps Compliance Corp on January 24, 2024 and sell it today you would earn a total of  100.00  from holding Sharps Compliance Corp or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sharps Compliance Corp  vs.  China Everbright Water

Sharps Compliance Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sharps Compliance Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Sharps Compliance is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

China Everbright Water

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Everbright Water has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, China Everbright is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sharps Compliance and China Everbright

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

The idea behind Sharps Compliance Corp and China Everbright Water 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.