Correlation Between Sunny Optical and Diageo PLC
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and Diageo PLC 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 Diageo PLC 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 Diageo PLC, you can compare the effects of market volatilities on Sunny Optical and Diageo PLC 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 Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Diageo PLC.
Diversification Opportunities for Sunny Optical and Diageo PLC
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sunny and Diageo is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Diageo PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC 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 Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC has no effect on the direction of Sunny Optical i.e., Sunny Optical and Diageo PLC go up and down completely randomly.
Pair Corralation between Sunny Optical and Diageo PLC
Assuming the 90 days trading horizon Sunny Optical Technology is expected to generate 2.73 times more return on investment than Diageo PLC. However, Sunny Optical is 2.73 times more volatile than Diageo PLC. It trades about 0.1 of its potential returns per unit of risk. Diageo PLC is currently generating about 0.03 per unit of risk. If you would invest 4,550 in Sunny Optical Technology on September 15, 2024 and sell it today you would earn a total of 2,225 from holding Sunny Optical Technology or generate 48.9% 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. Diageo PLC
Performance |
| Timeline |
| Sunny Optical Technology |
| Diageo PLC |
Sunny Optical and Diageo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and Diageo PLC
The main advantage of trading using opposite Sunny Optical and Diageo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, Diageo PLC 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 Diageo PLC will offset losses from the drop in Diageo PLC's long position.| Sunny Optical vs. Vitec Software Group | Sunny Optical vs. Roebuck Food Group | Sunny Optical vs. Edita Food Industries | Sunny Optical vs. Leroy Seafood Group |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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