Correlation Between Sunny Optical and Digilife Technologies
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and Digilife Technologies 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 Digilife Technologies 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 Digilife Technologies Limited, you can compare the effects of market volatilities on Sunny Optical and Digilife Technologies 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 Digilife Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Digilife Technologies.
Diversification Opportunities for Sunny Optical and Digilife Technologies
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sunny and Digilife is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Digilife Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digilife Technologies 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 Digilife Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digilife Technologies has no effect on the direction of Sunny Optical i.e., Sunny Optical and Digilife Technologies go up and down completely randomly.
Pair Corralation between Sunny Optical and Digilife Technologies
Assuming the 90 days horizon Sunny Optical Technology is expected to generate 0.71 times more return on investment than Digilife Technologies. However, Sunny Optical Technology is 1.41 times less risky than Digilife Technologies. It trades about 0.08 of its potential returns per unit of risk. Digilife Technologies Limited is currently generating about -0.1 per unit of risk. If you would invest 802.00 in Sunny Optical Technology on November 1, 2024 and sell it today you would earn a total of 36.00 from holding Sunny Optical Technology or generate 4.49% 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. Digilife Technologies Limited
Performance |
| Timeline |
| Sunny Optical Technology |
| Digilife Technologies |
Sunny Optical and Digilife Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and Digilife Technologies
The main advantage of trading using opposite Sunny Optical and Digilife Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, Digilife Technologies 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 Digilife Technologies will offset losses from the drop in Digilife Technologies' long position.| Sunny Optical vs. Tyson Foods | Sunny Optical vs. CN DATANG C | Sunny Optical vs. Pure Storage | Sunny Optical vs. TERADATA |
| Digilife Technologies vs. Japan Tobacco | Digilife Technologies vs. THORNEY TECHS LTD | Digilife Technologies vs. VIVA WINE GROUP | Digilife Technologies vs. British American Tobacco |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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