Correlation Between Associated British and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both Associated British and Sunny Optical 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 Associated British and Sunny Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Sunny Optical Technology, you can compare the effects of market volatilities on Associated British and Sunny Optical 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 Associated British with a short position of Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Sunny Optical.
Diversification Opportunities for Associated British and Sunny Optical
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Associated and Sunny is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Sunny Optical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Optical Technology and Associated British 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 Associated British Foods are associated (or correlated) with Sunny Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Optical Technology has no effect on the direction of Associated British i.e., Associated British and Sunny Optical go up and down completely randomly.
Pair Corralation between Associated British and Sunny Optical
Assuming the 90 days trading horizon Associated British Foods is expected to under-perform the Sunny Optical. But the stock apears to be less risky and, when comparing its historical volatility, Associated British Foods is 2.3 times less risky than Sunny Optical. The stock trades about -0.23 of its potential returns per unit of risk. The Sunny Optical Technology is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,675 in Sunny Optical Technology on November 6, 2024 and sell it today you would earn a total of 330.00 from holding Sunny Optical Technology or generate 4.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Sunny Optical Technology
Performance |
| Timeline |
| Associated British Foods |
| Sunny Optical Technology |
Associated British and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Sunny Optical
The main advantage of trading using opposite Associated British and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Sunny Optical 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 Sunny Optical will offset losses from the drop in Sunny Optical's long position.| Associated British vs. Coeur Mining | Associated British vs. Fevertree Drinks Plc | Associated British vs. Pan American Silver | Associated British vs. Beowulf Mining |
| Sunny Optical vs. Ondine Biomedical | Sunny Optical vs. Gamma Communications PLC | Sunny Optical vs. Spirent Communications plc | Sunny Optical vs. Medical Properties Trust |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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