Correlation Between ESUN Financial and MetaTech

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

By analyzing existing cross correlation between ESUN Financial Holding and MetaTech AP, you can compare the effects of market volatilities on ESUN Financial and MetaTech 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 ESUN Financial with a short position of MetaTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESUN Financial and MetaTech.

Diversification Opportunities for ESUN Financial and MetaTech

-0.5

Correlation Coefficient

ESUN Financial  MetaTech

Very good diversification

The 3 months correlation between ESUN and MetaTech is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ESUN Financial Holding and MetaTech AP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetaTech AP and ESUN Financial 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 ESUN Financial Holding are associated (or correlated) with MetaTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetaTech AP has no effect on the direction of ESUN Financial i.e., ESUN Financial and MetaTech go up and down completely randomly.

Pair Corralation between ESUN Financial and MetaTech

Assuming the 90 days trading horizon ESUN Financial Holding is expected to generate 0.41 times more return on investment than MetaTech. However, ESUN Financial Holding is 2.46 times less risky than MetaTech. It trades about 0.12 of its potential returns per unit of risk. MetaTech AP is currently generating about -0.02 per unit of risk. If you would invest  2,455  in ESUN Financial Holding on February 6, 2024 and sell it today you would earn a total of  305.00  from holding ESUN Financial Holding or generate 12.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ESUN Financial Holding  vs.  MetaTech AP

ESUN Financial Holding

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ESUN Financial Holding are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ESUN Financial showed solid returns over the last few months and may actually be approaching a breakup point.

MetaTech AP

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MetaTech AP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, MetaTech may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with ESUN Financial and MetaTech

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

The idea behind ESUN Financial Holding and MetaTech AP 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.