Correlation Between IMPERIAL TOBACCO and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO 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 IMPERIAL TOBACCO and Sunny Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and Sunny Optical Technology, you can compare the effects of market volatilities on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO with a short position of Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and Sunny Optical.
Diversification Opportunities for IMPERIAL TOBACCO and Sunny Optical
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IMPERIAL and Sunny is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and Sunny Optical go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and Sunny Optical
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 0.21 times more return on investment than Sunny Optical. However, IMPERIAL TOBACCO is 4.78 times less risky than Sunny Optical. It trades about -0.28 of its potential returns per unit of risk. Sunny Optical Technology is currently generating about -0.1 per unit of risk. If you would invest 3,140 in IMPERIAL TOBACCO on October 17, 2024 and sell it today you would lose (105.00) from holding IMPERIAL TOBACCO or give up 3.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.44% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. Sunny Optical Technology
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| Sunny Optical Technology |
IMPERIAL TOBACCO and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and Sunny Optical
The main advantage of trading using opposite IMPERIAL TOBACCO and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO 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.| IMPERIAL TOBACCO vs. VIENNA INSURANCE GR | IMPERIAL TOBACCO vs. COMBA TELECOM SYST | IMPERIAL TOBACCO vs. Zurich Insurance Group | IMPERIAL TOBACCO vs. Safety Insurance Group |
| Sunny Optical vs. Renesas Electronics | Sunny Optical vs. SPARTAN STORES | Sunny Optical vs. Samsung Electronics Co | Sunny Optical vs. IMPERIAL TOBACCO |
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 CEOs Directory module to screen CEOs from public companies around the world.
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