Correlation Between Sunny Optical and Sims Metal
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and Sims Metal 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 Sims Metal 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 Sims Metal Management, you can compare the effects of market volatilities on Sunny Optical and Sims Metal 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 Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Sims Metal.
Diversification Opportunities for Sunny Optical and Sims Metal
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunny and Sims is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Sims Metal Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims Metal Management 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 Sims Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims Metal Management has no effect on the direction of Sunny Optical i.e., Sunny Optical and Sims Metal go up and down completely randomly.
Pair Corralation between Sunny Optical and Sims Metal
Assuming the 90 days horizon Sunny Optical Technology is expected to generate 1.31 times more return on investment than Sims Metal. However, Sunny Optical is 1.31 times more volatile than Sims Metal Management. It trades about 0.29 of its potential returns per unit of risk. Sims Metal Management is currently generating about -0.03 per unit of risk. If you would invest 671.00 in Sunny Optical Technology on September 13, 2024 and sell it today you would earn a total of 124.00 from holding Sunny Optical Technology or generate 18.48% 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. Sims Metal Management
Performance |
| Timeline |
| Sunny Optical Technology |
| Sims Metal Management |
Sunny Optical and Sims Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and Sims Metal
The main advantage of trading using opposite Sunny Optical and Sims Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, Sims Metal 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 Sims Metal will offset losses from the drop in Sims Metal's long position.| Sunny Optical vs. Hubbell Incorporated | Sunny Optical vs. TDK Corporation | Sunny Optical vs. Superior Plus Corp | Sunny Optical vs. SIVERS SEMICONDUCTORS AB |
| Sims Metal vs. ArcelorMittal | Sims Metal vs. NIPPON STEEL SPADR | Sims Metal vs. Reliance Steel Aluminum | Sims Metal vs. Superior Plus Corp |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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