Correlation Between Sunny Optical and Axfood AB
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and Axfood AB 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 Axfood AB 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 Axfood AB, you can compare the effects of market volatilities on Sunny Optical and Axfood AB 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 Axfood AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Axfood AB.
Diversification Opportunities for Sunny Optical and Axfood AB
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sunny and Axfood is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB 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 Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of Sunny Optical i.e., Sunny Optical and Axfood AB go up and down completely randomly.
Pair Corralation between Sunny Optical and Axfood AB
Assuming the 90 days trading horizon Sunny Optical Technology is expected to generate 3.7 times more return on investment than Axfood AB. However, Sunny Optical is 3.7 times more volatile than Axfood AB. It trades about 0.25 of its potential returns per unit of risk. Axfood AB is currently generating about 0.02 per unit of risk. If you would invest 5,055 in Sunny Optical Technology on August 31, 2024 and sell it today you would earn a total of 1,130 from holding Sunny Optical Technology or generate 22.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Optical Technology vs. Axfood AB
Performance |
| Timeline |
| Sunny Optical Technology |
| Axfood AB |
Sunny Optical and Axfood AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and Axfood AB
The main advantage of trading using opposite Sunny Optical and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, Axfood AB 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 Axfood AB will offset losses from the drop in Axfood AB's long position.| Sunny Optical vs. Neometals | Sunny Optical vs. Coor Service Management | Sunny Optical vs. Aeorema Communications Plc | Sunny Optical vs. JLEN Environmental Assets |
| Axfood AB vs. Take Two Interactive Software | Axfood AB vs. Melia Hotels | Axfood AB vs. Microchip Technology | Axfood AB vs. Compagnie Plastic Omnium |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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