Correlation Between Sunny Optical and American Homes
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and American Homes 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 Sunny Optical and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunny Optical Technology and American Homes 4, you can compare the effects of market volatilities on Sunny Optical and American Homes 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 Sunny Optical with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and American Homes.
Diversification Opportunities for Sunny Optical and American Homes
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sunny and American is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 and Sunny Optical 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 Sunny Optical Technology are associated (or correlated) with American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of Sunny Optical i.e., Sunny Optical and American Homes go up and down completely randomly.
Pair Corralation between Sunny Optical and American Homes
Assuming the 90 days trading horizon Sunny Optical Technology is expected to generate 2.3 times more return on investment than American Homes. However, Sunny Optical is 2.3 times more volatile than American Homes 4. It trades about 0.36 of its potential returns per unit of risk. American Homes 4 is currently generating about 0.0 per unit of risk. If you would invest 5,530 in Sunny Optical Technology on September 19, 2024 and sell it today you would earn a total of 1,250 from holding Sunny Optical Technology or generate 22.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Sunny Optical Technology vs. American Homes 4
Performance |
| Timeline |
| Sunny Optical Technology |
| American Homes 4 |
Sunny Optical and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and American Homes
The main advantage of trading using opposite Sunny Optical and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, American Homes 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 American Homes will offset losses from the drop in American Homes' long position.| Sunny Optical vs. Samsung Electronics Co | Sunny Optical vs. Samsung Electronics Co | Sunny Optical vs. Hyundai Motor | Sunny Optical vs. Reliance Industries Ltd |
| American Homes vs. Samsung Electronics Co | American Homes vs. Samsung Electronics Co | American Homes vs. Hyundai Motor | American Homes vs. Reliance Industries Ltd |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |