Correlation Between Sunny Optical and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and Norsk Hydro 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 Norsk Hydro 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 Norsk Hydro ASA, you can compare the effects of market volatilities on Sunny Optical and Norsk Hydro 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 Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Norsk Hydro.
Diversification Opportunities for Sunny Optical and Norsk Hydro
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunny and Norsk is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Norsk Hydro ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norsk Hydro ASA 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 Norsk Hydro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norsk Hydro ASA has no effect on the direction of Sunny Optical i.e., Sunny Optical and Norsk Hydro go up and down completely randomly.
Pair Corralation between Sunny Optical and Norsk Hydro
Assuming the 90 days horizon Sunny Optical Technology is expected to generate 1.25 times more return on investment than Norsk Hydro. However, Sunny Optical is 1.25 times more volatile than Norsk Hydro ASA. It trades about 0.22 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about 0.12 per unit of risk. If you would invest 570.00 in Sunny Optical Technology on August 24, 2024 and sell it today you would earn a total of 115.00 from holding Sunny Optical Technology or generate 20.18% 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. Norsk Hydro ASA
Performance |
| Timeline |
| Sunny Optical Technology |
| Norsk Hydro ASA |
Sunny Optical and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and Norsk Hydro
The main advantage of trading using opposite Sunny Optical and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, Norsk Hydro 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 Norsk Hydro will offset losses from the drop in Norsk Hydro's long position.| Sunny Optical vs. GOODYEAR T RUBBER | Sunny Optical vs. MACOM Technology Solutions | Sunny Optical vs. Martin Marietta Materials | Sunny Optical vs. Firan Technology Group |
| Norsk Hydro vs. DAIRY FARM INTL | Norsk Hydro vs. Daito Trust Construction | Norsk Hydro vs. Aegean Airlines SA | Norsk Hydro vs. United Airlines Holdings |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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