Correlation Between Sunny Optical and Euronext
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and Euronext 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 Euronext 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 Euronext NV, you can compare the effects of market volatilities on Sunny Optical and Euronext 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 Euronext. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Euronext.
Diversification Opportunities for Sunny Optical and Euronext
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunny and Euronext is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Euronext NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euronext NV 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 Euronext. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euronext NV has no effect on the direction of Sunny Optical i.e., Sunny Optical and Euronext go up and down completely randomly.
Pair Corralation between Sunny Optical and Euronext
Assuming the 90 days horizon Sunny Optical Technology is expected to generate 2.81 times more return on investment than Euronext. However, Sunny Optical is 2.81 times more volatile than Euronext NV. It trades about 0.1 of its potential returns per unit of risk. Euronext NV is currently generating about 0.19 per unit of risk. If you would invest 822.00 in Sunny Optical Technology on November 4, 2024 and sell it today you would earn a total of 53.00 from holding Sunny Optical Technology or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sunny Optical Technology vs. Euronext NV
Performance |
| Timeline |
| Sunny Optical Technology |
| Euronext NV |
Sunny Optical and Euronext Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and Euronext
The main advantage of trading using opposite Sunny Optical and Euronext positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, Euronext 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 Euronext will offset losses from the drop in Euronext's long position.| Sunny Optical vs. Air New Zealand | Sunny Optical vs. Melco Resorts Entertainment | Sunny Optical vs. JAPAN TOBACCO UNSPADR12 | Sunny Optical vs. FORWARD AIR P |
| Euronext vs. FIREWEED METALS P | Euronext vs. Harmony Gold Mining | Euronext vs. ARDAGH METAL PACDL 0001 | Euronext vs. East Africa Metals |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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