Correlation Between Flex and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both Flex 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 Flex and Sunny Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flex and Sunny Optical Technology, you can compare the effects of market volatilities on Flex 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 Flex with a short position of Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flex and Sunny Optical.
Diversification Opportunities for Flex and Sunny Optical
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Flex and Sunny is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Flex 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 Flex 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 Flex 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 Flex i.e., Flex and Sunny Optical go up and down completely randomly.
Pair Corralation between Flex and Sunny Optical
Given the investment horizon of 90 days Flex is expected to generate 1.08 times more return on investment than Sunny Optical. However, Flex is 1.08 times more volatile than Sunny Optical Technology. It trades about 0.09 of its potential returns per unit of risk. Sunny Optical Technology is currently generating about -0.01 per unit of risk. If you would invest 963.00 in Flex on August 27, 2024 and sell it today you would earn a total of 3,167 from holding Flex or generate 328.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flex vs. Sunny Optical Technology
Performance |
| Timeline |
| Flex |
| Sunny Optical Technology |
Flex and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flex and Sunny Optical
The main advantage of trading using opposite Flex and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flex 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.The idea behind Flex and Sunny Optical Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sunny Optical vs. LGL Group | Sunny Optical vs. Data IO | Sunny Optical vs. Sanmina | Sunny Optical vs. Plexus Corp |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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