Correlation Between Sunny Optical and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and Micron Technology 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 Micron Technology 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 Micron Technology, you can compare the effects of market volatilities on Sunny Optical and Micron Technology 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 Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Micron Technology.
Diversification Opportunities for Sunny Optical and Micron Technology
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunny and Micron is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Sunny Optical i.e., Sunny Optical and Micron Technology go up and down completely randomly.
Pair Corralation between Sunny Optical and Micron Technology
Assuming the 90 days horizon Sunny Optical Technology is expected to generate 1.49 times more return on investment than Micron Technology. However, Sunny Optical is 1.49 times more volatile than Micron Technology. It trades about 0.09 of its potential returns per unit of risk. Micron Technology is currently generating about 0.01 per unit of risk. If you would invest 625.00 in Sunny Optical Technology on August 28, 2024 and sell it today you would earn a total of 77.00 from holding Sunny Optical Technology or generate 12.32% 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. Micron Technology
Performance |
| Timeline |
| Sunny Optical Technology |
| Micron Technology |
Sunny Optical and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and Micron Technology
The main advantage of trading using opposite Sunny Optical and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology's long position.The idea behind Sunny Optical Technology and Micron Technology 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.| Micron Technology vs. Apple Inc | Micron Technology vs. Apple Inc | Micron Technology vs. Apple Inc | Micron Technology vs. Apple Inc |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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