Correlation Between Sunny Optical and Broadwind
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and Broadwind 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 Broadwind 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 Broadwind, you can compare the effects of market volatilities on Sunny Optical and Broadwind 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 Broadwind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Broadwind.
Diversification Opportunities for Sunny Optical and Broadwind
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sunny and Broadwind is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Broadwind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadwind 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 Broadwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadwind has no effect on the direction of Sunny Optical i.e., Sunny Optical and Broadwind go up and down completely randomly.
Pair Corralation between Sunny Optical and Broadwind
Assuming the 90 days horizon Sunny Optical Technology is expected to generate 0.75 times more return on investment than Broadwind. However, Sunny Optical Technology is 1.34 times less risky than Broadwind. It trades about 0.08 of its potential returns per unit of risk. Broadwind is currently generating about -0.05 per unit of risk. If you would invest 858.00 in Sunny Optical Technology on October 28, 2024 and sell it today you would earn a total of 41.00 from holding Sunny Optical Technology or generate 4.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Optical Technology vs. Broadwind
Performance |
| Timeline |
| Sunny Optical Technology |
| Broadwind |
Sunny Optical and Broadwind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and Broadwind
The main advantage of trading using opposite Sunny Optical and Broadwind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, Broadwind 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 Broadwind will offset losses from the drop in Broadwind's long position.| Sunny Optical vs. Hon Hai Precision | Sunny Optical vs. Samsung SDI Co | Sunny Optical vs. Corning Incorporated | Sunny Optical vs. Mitsubishi Electric |
| Broadwind vs. Sanyo Chemical Industries | Broadwind vs. TYSON FOODS A | Broadwind vs. Shin Etsu Chemical Co | Broadwind vs. Sekisui Chemical 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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