Correlation Between Coffee Holding and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both Coffee Holding 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 Coffee Holding and Sunny Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coffee Holding Co and Sunny Optical Technology, you can compare the effects of market volatilities on Coffee Holding 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 Coffee Holding with a short position of Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coffee Holding and Sunny Optical.
Diversification Opportunities for Coffee Holding and Sunny Optical
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coffee and Sunny is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Holding Co 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 Coffee Holding 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 Coffee Holding Co 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 Coffee Holding i.e., Coffee Holding and Sunny Optical go up and down completely randomly.
Pair Corralation between Coffee Holding and Sunny Optical
Assuming the 90 days horizon Coffee Holding Co is expected to under-perform the Sunny Optical. In addition to that, Coffee Holding is 1.5 times more volatile than Sunny Optical Technology. It trades about -0.15 of its total potential returns per unit of risk. Sunny Optical Technology is currently generating about -0.08 per unit of volatility. If you would invest 810.00 in Sunny Optical Technology on October 16, 2024 and sell it today you would lose (40.00) from holding Sunny Optical Technology or give up 4.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coffee Holding Co vs. Sunny Optical Technology
Performance |
| Timeline |
| Coffee Holding |
| Sunny Optical Technology |
Coffee Holding and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coffee Holding and Sunny Optical
The main advantage of trading using opposite Coffee Holding and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coffee Holding 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.| Coffee Holding vs. FIREWEED METALS P | Coffee Holding vs. GALENA MINING LTD | Coffee Holding vs. GBS Software AG | Coffee Holding vs. MCEWEN MINING INC |
| Sunny Optical vs. CyberArk Software | Sunny Optical vs. ANGLO ASIAN MINING | Sunny Optical vs. VITEC SOFTWARE GROUP | Sunny Optical vs. UPDATE 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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