Correlation Between Sunny Optical and Associated British
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and Associated British 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 Associated British 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 Associated British Foods, you can compare the effects of market volatilities on Sunny Optical and Associated British 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 Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Associated British.
Diversification Opportunities for Sunny Optical and Associated British
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sunny and Associated is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Sunny Optical i.e., Sunny Optical and Associated British go up and down completely randomly.
Pair Corralation between Sunny Optical and Associated British
Assuming the 90 days trading horizon Sunny Optical Technology is expected to generate 2.81 times more return on investment than Associated British. However, Sunny Optical is 2.81 times more volatile than Associated British Foods. It trades about 0.01 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.01 per unit of risk. If you would invest 7,125 in Sunny Optical Technology on September 12, 2024 and sell it today you would lose (610.00) from holding Sunny Optical Technology or give up 8.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.4% |
| Values | Daily Returns |
Sunny Optical Technology vs. Associated British Foods
Performance |
| Timeline |
| Sunny Optical Technology |
| Associated British Foods |
Sunny Optical and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and Associated British
The main advantage of trading using opposite Sunny Optical and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| Sunny Optical vs. Catena Media PLC | Sunny Optical vs. Liberty Media Corp | Sunny Optical vs. Everyman Media Group | Sunny Optical vs. Grand Vision Media |
| Associated British vs. Ebro Foods | Associated British vs. Premier Foods PLC | Associated British vs. Cairo Communication SpA | Associated British vs. Gruppo MutuiOnline SpA |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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