Correlation Between GOODYEAR T and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both GOODYEAR T 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 GOODYEAR T and Sunny Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOODYEAR T RUBBER and Sunny Optical Technology, you can compare the effects of market volatilities on GOODYEAR T 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 GOODYEAR T with a short position of Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOODYEAR T and Sunny Optical.
Diversification Opportunities for GOODYEAR T and Sunny Optical
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GOODYEAR and Sunny is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding GOODYEAR T RUBBER 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 GOODYEAR T 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 GOODYEAR T RUBBER 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 GOODYEAR T i.e., GOODYEAR T and Sunny Optical go up and down completely randomly.
Pair Corralation between GOODYEAR T and Sunny Optical
Assuming the 90 days trading horizon GOODYEAR T RUBBER is expected to generate 0.79 times more return on investment than Sunny Optical. However, GOODYEAR T RUBBER is 1.27 times less risky than Sunny Optical. It trades about 0.01 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 994.00 in GOODYEAR T RUBBER on August 24, 2024 and sell it today you would lose (60.00) from holding GOODYEAR T RUBBER or give up 6.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GOODYEAR T RUBBER vs. Sunny Optical Technology
Performance |
| Timeline |
| GOODYEAR T RUBBER |
| Sunny Optical Technology |
GOODYEAR T and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOODYEAR T and Sunny Optical
The main advantage of trading using opposite GOODYEAR T and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOODYEAR T 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 GOODYEAR T RUBBER 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. GOODYEAR T RUBBER | Sunny Optical vs. MACOM Technology Solutions | Sunny Optical vs. Martin Marietta Materials | Sunny Optical vs. Firan Technology Group |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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