Correlation Between Sunny Optical and JAPAN AIRLINES
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and JAPAN AIRLINES 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 JAPAN AIRLINES 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 JAPAN AIRLINES, you can compare the effects of market volatilities on Sunny Optical and JAPAN AIRLINES 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 JAPAN AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and JAPAN AIRLINES.
Diversification Opportunities for Sunny Optical and JAPAN AIRLINES
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sunny and JAPAN is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and JAPAN AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN AIRLINES 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 JAPAN AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN AIRLINES has no effect on the direction of Sunny Optical i.e., Sunny Optical and JAPAN AIRLINES go up and down completely randomly.
Pair Corralation between Sunny Optical and JAPAN AIRLINES
Assuming the 90 days horizon Sunny Optical Technology is expected to generate 2.79 times more return on investment than JAPAN AIRLINES. However, Sunny Optical is 2.79 times more volatile than JAPAN AIRLINES. It trades about 0.01 of its potential returns per unit of risk. JAPAN AIRLINES is currently generating about -0.03 per unit of risk. If you would invest 844.00 in Sunny Optical Technology on August 29, 2024 and sell it today you would lose (142.00) from holding Sunny Optical Technology or give up 16.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Optical Technology vs. JAPAN AIRLINES
Performance |
| Timeline |
| Sunny Optical Technology |
| JAPAN AIRLINES |
Sunny Optical and JAPAN AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and JAPAN AIRLINES
The main advantage of trading using opposite Sunny Optical and JAPAN AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, JAPAN AIRLINES 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 JAPAN AIRLINES will offset losses from the drop in JAPAN AIRLINES's long position.The idea behind Sunny Optical Technology and JAPAN AIRLINES pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| JAPAN AIRLINES vs. Hyrican Informationssysteme Aktiengesellschaft | JAPAN AIRLINES vs. Sunny Optical Technology | JAPAN AIRLINES vs. INFORMATION SVC GRP | JAPAN AIRLINES vs. NetSol Technologies |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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