Correlation Between G III and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both G III 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 G III and Sunny Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G III Apparel Group and Sunny Optical Technology, you can compare the effects of market volatilities on G III 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 G III with a short position of Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of G III and Sunny Optical.
Diversification Opportunities for G III and Sunny Optical
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GI4 and Sunny is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group 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 G III 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 G III Apparel Group 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 G III i.e., G III and Sunny Optical go up and down completely randomly.
Pair Corralation between G III and Sunny Optical
Assuming the 90 days trading horizon G III Apparel Group is expected to generate 0.88 times more return on investment than Sunny Optical. However, G III Apparel Group is 1.14 times less risky than Sunny Optical. It trades about 0.07 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 1,280 in G III Apparel Group on September 24, 2024 and sell it today you would earn a total of 1,940 from holding G III Apparel Group or generate 151.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
G III Apparel Group vs. Sunny Optical Technology
Performance |
| Timeline |
| G III Apparel |
| Sunny Optical Technology |
G III and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G III and Sunny Optical
The main advantage of trading using opposite G III and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G III 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 G III Apparel Group 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. G III Apparel Group | Sunny Optical vs. ATOSS SOFTWARE | Sunny Optical vs. Take Two Interactive Software | Sunny Optical vs. CyberArk 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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