Correlation Between Sunny Optical and Blue Sky
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and Blue Sky 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 Blue Sky 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 Blue Sky Uranium, you can compare the effects of market volatilities on Sunny Optical and Blue Sky 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 Blue Sky. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Blue Sky.
Diversification Opportunities for Sunny Optical and Blue Sky
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sunny and Blue is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Blue Sky Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Sky Uranium 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 Blue Sky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Sky Uranium has no effect on the direction of Sunny Optical i.e., Sunny Optical and Blue Sky go up and down completely randomly.
Pair Corralation between Sunny Optical and Blue Sky
Assuming the 90 days horizon Sunny Optical is expected to generate 2.76 times less return on investment than Blue Sky. But when comparing it to its historical volatility, Sunny Optical Technology is 4.23 times less risky than Blue Sky. It trades about 0.09 of its potential returns per unit of risk. Blue Sky Uranium is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3.72 in Blue Sky Uranium on September 5, 2024 and sell it today you would lose (0.68) from holding Blue Sky Uranium or give up 18.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Sunny Optical Technology vs. Blue Sky Uranium
Performance |
| Timeline |
| Sunny Optical Technology |
| Blue Sky Uranium |
Sunny Optical and Blue Sky Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and Blue Sky
The main advantage of trading using opposite Sunny Optical and Blue Sky positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, Blue Sky 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 Blue Sky will offset losses from the drop in Blue Sky's long position.The idea behind Sunny Optical Technology and Blue Sky Uranium 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.| Blue Sky vs. Sunny Optical Technology | Blue Sky vs. Aluminum of | Blue Sky vs. Lion One Metals | Blue Sky vs. MOVIE GAMES SA |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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