Correlation Between Sunny Optical and ITM Power
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and ITM Power 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 ITM Power 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 ITM Power Plc, you can compare the effects of market volatilities on Sunny Optical and ITM Power 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 ITM Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and ITM Power.
Diversification Opportunities for Sunny Optical and ITM Power
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sunny and ITM is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and ITM Power Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Power 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 ITM Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Power Plc has no effect on the direction of Sunny Optical i.e., Sunny Optical and ITM Power go up and down completely randomly.
Pair Corralation between Sunny Optical and ITM Power
Assuming the 90 days horizon Sunny Optical Technology is expected to generate 1.06 times more return on investment than ITM Power. However, Sunny Optical is 1.06 times more volatile than ITM Power Plc. It trades about 0.2 of its potential returns per unit of risk. ITM Power Plc is currently generating about -0.21 per unit of risk. If you would invest 770.00 in Sunny Optical Technology on December 11, 2024 and sell it today you would earn a total of 281.00 from holding Sunny Optical Technology or generate 36.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Optical Technology vs. ITM Power Plc
Performance |
| Timeline |
| Sunny Optical Technology |
| ITM Power Plc |
Sunny Optical and ITM Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and ITM Power
The main advantage of trading using opposite Sunny Optical and ITM Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, ITM Power 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 ITM Power will offset losses from the drop in ITM Power's long position.| Sunny Optical vs. IMPERIAL TOBACCO | Sunny Optical vs. LG Display Co | Sunny Optical vs. ePlay Digital | Sunny Optical vs. Ming Le Sports |
| ITM Power vs. Nel ASA | ITM Power vs. Powercell Sweden | ITM Power vs. Ballard Power Systems | ITM Power vs. Plug Power |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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