Correlation Between Sunny Optical and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and Dow Jones 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 Sunny Optical and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunny Optical Technology and Dow Jones Industrial, you can compare the effects of market volatilities on Sunny Optical and Dow Jones 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 Sunny Optical with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Dow Jones.
Diversification Opportunities for Sunny Optical and Dow Jones
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sunny and Dow is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Sunny Optical 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 Sunny Optical Technology are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Sunny Optical i.e., Sunny Optical and Dow Jones go up and down completely randomly.
Pair Corralation between Sunny Optical and Dow Jones
Assuming the 90 days horizon Sunny Optical Technology is expected to generate 3.99 times more return on investment than Dow Jones. However, Sunny Optical is 3.99 times more volatile than Dow Jones Industrial. It trades about 0.05 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of risk. If you would invest 615.00 in Sunny Optical Technology on August 30, 2024 and sell it today you would earn a total of 40.00 from holding Sunny Optical Technology or generate 6.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Optical Technology vs. Dow Jones Industrial
Performance |
| Timeline |
Sunny Optical and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Sunny Optical Technology
Pair trading matchups for Sunny Optical
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Sunny Optical and Dow Jones
The main advantage of trading using opposite Sunny Optical and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Sunny Optical vs. OSI Systems | Sunny Optical vs. Fabrinet | Sunny Optical vs. Corning Incorporated | Sunny Optical vs. Jabil Circuit |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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