Correlation Between Sunny Optical and Eclectic Bar
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and Eclectic Bar 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 Eclectic Bar 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 Eclectic Bar Group, you can compare the effects of market volatilities on Sunny Optical and Eclectic Bar 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 Eclectic Bar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Eclectic Bar.
Diversification Opportunities for Sunny Optical and Eclectic Bar
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunny and Eclectic is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Eclectic Bar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eclectic Bar Group 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 Eclectic Bar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eclectic Bar Group has no effect on the direction of Sunny Optical i.e., Sunny Optical and Eclectic Bar go up and down completely randomly.
Pair Corralation between Sunny Optical and Eclectic Bar
Assuming the 90 days trading horizon Sunny Optical Technology is expected to under-perform the Eclectic Bar. But the stock apears to be less risky and, when comparing its historical volatility, Sunny Optical Technology is 1.44 times less risky than Eclectic Bar. The stock trades about -0.02 of its potential returns per unit of risk. The Eclectic Bar Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,650 in Eclectic Bar Group on October 12, 2024 and sell it today you would earn a total of 2,050 from holding Eclectic Bar Group or generate 77.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.36% |
| Values | Daily Returns |
Sunny Optical Technology vs. Eclectic Bar Group
Performance |
| Timeline |
| Sunny Optical Technology |
| Eclectic Bar Group |
Sunny Optical and Eclectic Bar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and Eclectic Bar
The main advantage of trading using opposite Sunny Optical and Eclectic Bar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, Eclectic Bar 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 Eclectic Bar will offset losses from the drop in Eclectic Bar's long position.| Sunny Optical vs. Tyson Foods Cl | Sunny Optical vs. Impax Environmental Markets | Sunny Optical vs. National Beverage Corp | Sunny Optical vs. Indutrade AB |
| Eclectic Bar vs. Aberdeen Diversified Income | Eclectic Bar vs. Sunny Optical Technology | Eclectic Bar vs. Seraphim Space Investment | Eclectic Bar vs. Alfa Financial Software |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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