Correlation Between Sunny Optical and BP Plc
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and BP Plc 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 BP Plc 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 BP plc, you can compare the effects of market volatilities on Sunny Optical and BP Plc 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 BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and BP Plc.
Diversification Opportunities for Sunny Optical and BP Plc
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sunny and BSU is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc 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 BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of Sunny Optical i.e., Sunny Optical and BP Plc go up and down completely randomly.
Pair Corralation between Sunny Optical and BP Plc
Assuming the 90 days horizon Sunny Optical Technology is expected to generate 2.27 times more return on investment than BP Plc. However, Sunny Optical is 2.27 times more volatile than BP plc. It trades about 0.0 of its potential returns per unit of risk. BP plc is currently generating about 0.0 per unit of risk. If you would invest 1,012 in Sunny Optical Technology on September 4, 2024 and sell it today you would lose (259.00) from holding Sunny Optical Technology or give up 25.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Optical Technology vs. BP plc
Performance |
| Timeline |
| Sunny Optical Technology |
| BP plc |
Sunny Optical and BP Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and BP Plc
The main advantage of trading using opposite Sunny Optical and BP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, BP Plc 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 BP Plc will offset losses from the drop in BP Plc's long position.| Sunny Optical vs. Hon Hai Precision | Sunny Optical vs. Samsung SDI Co | Sunny Optical vs. Murata Manufacturing Co | Sunny Optical vs. Mitsubishi Electric |
| BP Plc vs. FANDIFI TECHNOLOGY P | BP Plc vs. Sunny Optical Technology | BP Plc vs. Sanyo Chemical Industries | BP Plc 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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