Correlation Between SMA Solar and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both SMA Solar 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 SMA Solar and Sunny Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and Sunny Optical Technology, you can compare the effects of market volatilities on SMA Solar 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 SMA Solar with a short position of Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Sunny Optical.
Diversification Opportunities for SMA Solar and Sunny Optical
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SMA and Sunny is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology 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 SMA Solar 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 SMA Solar Technology 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 SMA Solar i.e., SMA Solar and Sunny Optical go up and down completely randomly.
Pair Corralation between SMA Solar and Sunny Optical
Assuming the 90 days horizon SMA Solar Technology is expected to under-perform the Sunny Optical. In addition to that, SMA Solar is 1.04 times more volatile than Sunny Optical Technology. It trades about -0.12 of its total potential returns per unit of risk. Sunny Optical Technology is currently generating about 0.01 per unit of volatility. If you would invest 844.00 in Sunny Optical Technology on August 29, 2024 and sell it today you would lose (142.00) from holding Sunny Optical Technology or give up 16.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Sunny Optical Technology
Performance |
| Timeline |
| SMA Solar Technology |
| Sunny Optical Technology |
SMA Solar and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Sunny Optical
The main advantage of trading using opposite SMA Solar and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar 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.| SMA Solar vs. Superior Plus Corp | SMA Solar vs. Origin Agritech | SMA Solar vs. Identiv | SMA Solar vs. INTUITIVE SURGICAL |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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