Correlation Between Fevertree Drinks and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks 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 Fevertree Drinks and Sunny Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks Plc and Sunny Optical Technology, you can compare the effects of market volatilities on Fevertree Drinks 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 Fevertree Drinks with a short position of Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Sunny Optical.
Diversification Opportunities for Fevertree Drinks and Sunny Optical
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fevertree and Sunny is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc 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 Fevertree Drinks 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 Fevertree Drinks Plc 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 Fevertree Drinks i.e., Fevertree Drinks and Sunny Optical go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Sunny Optical
Assuming the 90 days trading horizon Fevertree Drinks Plc is expected to under-perform the Sunny Optical. But the stock apears to be less risky and, when comparing its historical volatility, Fevertree Drinks Plc is 1.85 times less risky than Sunny Optical. The stock trades about -0.03 of its potential returns per unit of risk. The Sunny Optical Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 7,020 in Sunny Optical Technology on October 31, 2024 and sell it today you would lose (15.00) from holding Sunny Optical Technology or give up 0.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fevertree Drinks Plc vs. Sunny Optical Technology
Performance |
| Timeline |
| Fevertree Drinks Plc |
| Sunny Optical Technology |
Fevertree Drinks and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Sunny Optical
The main advantage of trading using opposite Fevertree Drinks and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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.| Fevertree Drinks vs. Kaufman Et Broad | Fevertree Drinks vs. Tavistock Investments Plc | Fevertree Drinks vs. Herald Investment Trust | Fevertree Drinks vs. Electronic Arts |
| Sunny Optical vs. Vietnam Enterprise Investments | Sunny Optical vs. Ashtead Technology Holdings | Sunny Optical vs. Compal Electronics GDR | Sunny Optical vs. STMicroelectronics NV |
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 CEOs Directory module to screen CEOs from public companies around the world.
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