Correlation Between Sunny Optical and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and Merit Medical 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 Merit Medical 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 Merit Medical Systems, you can compare the effects of market volatilities on Sunny Optical and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Merit Medical.
Diversification Opportunities for Sunny Optical and Merit Medical
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunny and Merit is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Sunny Optical i.e., Sunny Optical and Merit Medical go up and down completely randomly.
Pair Corralation between Sunny Optical and Merit Medical
Assuming the 90 days horizon Sunny Optical is expected to generate 2.56 times less return on investment than Merit Medical. In addition to that, Sunny Optical is 2.11 times more volatile than Merit Medical Systems. It trades about 0.01 of its total potential returns per unit of risk. Merit Medical Systems is currently generating about 0.05 per unit of volatility. If you would invest 6,450 in Merit Medical Systems on September 24, 2024 and sell it today you would earn a total of 2,650 from holding Merit Medical Systems or generate 41.09% 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. Merit Medical Systems
Performance |
| Timeline |
| Sunny Optical Technology |
| Merit Medical Systems |
Sunny Optical and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and Merit Medical
The main advantage of trading using opposite Sunny Optical and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| Sunny Optical vs. G III Apparel Group | Sunny Optical vs. ATOSS SOFTWARE | Sunny Optical vs. Take Two Interactive Software | Sunny Optical vs. CyberArk Software |
| Merit Medical vs. Sunny Optical Technology | Merit Medical vs. Hollywood Bowl Group | Merit Medical vs. Amkor Technology | Merit Medical vs. SMA Solar Technology |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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