Correlation Between Sunny Optical and Givaudan
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and Givaudan 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 Givaudan 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 Givaudan SA, you can compare the effects of market volatilities on Sunny Optical and Givaudan 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 Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Givaudan.
Diversification Opportunities for Sunny Optical and Givaudan
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sunny and Givaudan is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA 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 Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA has no effect on the direction of Sunny Optical i.e., Sunny Optical and Givaudan go up and down completely randomly.
Pair Corralation between Sunny Optical and Givaudan
Assuming the 90 days trading horizon Sunny Optical Technology is expected to generate 3.17 times more return on investment than Givaudan. However, Sunny Optical is 3.17 times more volatile than Givaudan SA. It trades about 0.19 of its potential returns per unit of risk. Givaudan SA is currently generating about -0.25 per unit of risk. If you would invest 4,915 in Sunny Optical Technology on August 29, 2024 and sell it today you would earn a total of 815.00 from holding Sunny Optical Technology or generate 16.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Optical Technology vs. Givaudan SA
Performance |
| Timeline |
| Sunny Optical Technology |
| Givaudan SA |
Sunny Optical and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and Givaudan
The main advantage of trading using opposite Sunny Optical and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, Givaudan 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 Givaudan will offset losses from the drop in Givaudan's long position.| Sunny Optical vs. Samsung Electronics Co | Sunny Optical vs. Samsung Electronics Co | Sunny Optical vs. Hyundai Motor | Sunny Optical vs. Toyota Motor Corp |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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