Correlation Between Henderson High and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both Henderson High 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 Henderson High and Sunny Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Henderson High Income and Sunny Optical Technology, you can compare the effects of market volatilities on Henderson High 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 Henderson High with a short position of Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henderson High and Sunny Optical.
Diversification Opportunities for Henderson High and Sunny Optical
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Henderson and Sunny is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Henderson High Income 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 Henderson High 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 Henderson High Income 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 Henderson High i.e., Henderson High and Sunny Optical go up and down completely randomly.
Pair Corralation between Henderson High and Sunny Optical
Assuming the 90 days trading horizon Henderson High is expected to generate 11.3 times less return on investment than Sunny Optical. But when comparing it to its historical volatility, Henderson High Income is 4.52 times less risky than Sunny Optical. It trades about 0.04 of its potential returns per unit of risk. Sunny Optical Technology is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,680 in Sunny Optical Technology on September 3, 2024 and sell it today you would earn a total of 1,845 from holding Sunny Optical Technology or generate 39.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Henderson High Income vs. Sunny Optical Technology
Performance |
| Timeline |
| Henderson High Income |
| Sunny Optical Technology |
Henderson High and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Henderson High and Sunny Optical
The main advantage of trading using opposite Henderson High and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henderson High 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.| Henderson High vs. Polar Capital Technology | Henderson High vs. Axfood AB | Henderson High vs. Edita Food Industries | Henderson High vs. Check Point Software |
| Sunny Optical vs. Catalyst Media Group | Sunny Optical vs. CATLIN GROUP | Sunny Optical vs. RTW Venture Fund | Sunny Optical vs. Secure Property Development |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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