Correlation Between Martin Marietta and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both Martin Marietta 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 Martin Marietta and Sunny Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Martin Marietta Materials and Sunny Optical Technology, you can compare the effects of market volatilities on Martin Marietta 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 Martin Marietta with a short position of Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Sunny Optical.
Diversification Opportunities for Martin Marietta and Sunny Optical
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Martin and Sunny is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials 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 Martin Marietta 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 Martin Marietta Materials 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 Martin Marietta i.e., Martin Marietta and Sunny Optical go up and down completely randomly.
Pair Corralation between Martin Marietta and Sunny Optical
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.41 times more return on investment than Sunny Optical. However, Martin Marietta Materials is 2.46 times less risky than Sunny Optical. It trades about 0.1 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 32,687 in Martin Marietta Materials on August 24, 2024 and sell it today you would earn a total of 24,593 from holding Martin Marietta Materials or generate 75.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. Sunny Optical Technology
Performance |
| Timeline |
| Martin Marietta Materials |
| Sunny Optical Technology |
Martin Marietta and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Sunny Optical
The main advantage of trading using opposite Martin Marietta and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta 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.| Martin Marietta vs. Mitsui Chemicals | Martin Marietta vs. OFFICE DEPOT | Martin Marietta vs. Quaker Chemical | Martin Marietta vs. Sekisui Chemical Co |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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