Correlation Between Sunny Optical and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and China BlueChemical 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 China BlueChemical 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 China BlueChemical, you can compare the effects of market volatilities on Sunny Optical and China BlueChemical 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 China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and China BlueChemical.
Diversification Opportunities for Sunny Optical and China BlueChemical
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunny and China is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical 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 China BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of Sunny Optical i.e., Sunny Optical and China BlueChemical go up and down completely randomly.
Pair Corralation between Sunny Optical and China BlueChemical
Assuming the 90 days horizon Sunny Optical Technology is expected to generate 1.16 times more return on investment than China BlueChemical. However, Sunny Optical is 1.16 times more volatile than China BlueChemical. It trades about 0.08 of its potential returns per unit of risk. China BlueChemical is currently generating about -0.14 per unit of risk. If you would invest 821.00 in Sunny Optical Technology on November 7, 2024 and sell it today you would earn a total of 42.00 from holding Sunny Optical Technology or generate 5.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Optical Technology vs. China BlueChemical
Performance |
| Timeline |
| Sunny Optical Technology |
| China BlueChemical |
Sunny Optical and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and China BlueChemical
The main advantage of trading using opposite Sunny Optical and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, China BlueChemical 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 China BlueChemical will offset losses from the drop in China BlueChemical's long position.| Sunny Optical vs. Haier Smart Home | Sunny Optical vs. Hisense Home Appliances | Sunny Optical vs. Air Lease | Sunny Optical vs. OFFICE DEPOT |
| China BlueChemical vs. Plastic Omnium | China BlueChemical vs. SOGECLAIR SA INH | China BlueChemical vs. Compagnie Plastic Omnium | China BlueChemical vs. VULCAN MATERIALS |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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