Correlation Between Sims Metal and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both Sims Metal 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 Sims Metal and Sunny Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sims Metal Management and Sunny Optical Technology, you can compare the effects of market volatilities on Sims Metal 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 Sims Metal with a short position of Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and Sunny Optical.
Diversification Opportunities for Sims Metal and Sunny Optical
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sims and Sunny is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management 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 Sims Metal 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 Sims Metal Management 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 Sims Metal i.e., Sims Metal and Sunny Optical go up and down completely randomly.
Pair Corralation between Sims Metal and Sunny Optical
Assuming the 90 days horizon Sims Metal Management is expected to under-perform the Sunny Optical. But the stock apears to be less risky and, when comparing its historical volatility, Sims Metal Management is 1.31 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 0.29 of returns per unit of risk over similar time horizon. If you would invest 671.00 in Sunny Optical Technology on September 13, 2024 and sell it today you would earn a total of 124.00 from holding Sunny Optical Technology or generate 18.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sims Metal Management vs. Sunny Optical Technology
Performance |
| Timeline |
| Sims Metal Management |
| Sunny Optical Technology |
Sims Metal and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sims Metal and Sunny Optical
The main advantage of trading using opposite Sims Metal and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims Metal 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.| Sims Metal vs. ArcelorMittal | Sims Metal vs. NIPPON STEEL SPADR | Sims Metal vs. Reliance Steel Aluminum | Sims Metal vs. Superior Plus Corp |
| Sunny Optical vs. Hubbell Incorporated | Sunny Optical vs. TDK Corporation | Sunny Optical vs. Superior Plus Corp | Sunny Optical vs. SIVERS SEMICONDUCTORS AB |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |