Correlation Between Sunny Optical and Richardson Electronics
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and Richardson Electronics 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 Richardson Electronics 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 Richardson Electronics, you can compare the effects of market volatilities on Sunny Optical and Richardson Electronics 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 Richardson Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Richardson Electronics.
Diversification Opportunities for Sunny Optical and Richardson Electronics
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunny and Richardson is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Richardson Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richardson Electronics 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 Richardson Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richardson Electronics has no effect on the direction of Sunny Optical i.e., Sunny Optical and Richardson Electronics go up and down completely randomly.
Pair Corralation between Sunny Optical and Richardson Electronics
Assuming the 90 days horizon Sunny Optical is expected to generate 6.06 times less return on investment than Richardson Electronics. In addition to that, Sunny Optical is 1.1 times more volatile than Richardson Electronics. It trades about 0.01 of its total potential returns per unit of risk. Richardson Electronics is currently generating about 0.04 per unit of volatility. If you would invest 1,150 in Richardson Electronics on August 27, 2024 and sell it today you would earn a total of 195.00 from holding Richardson Electronics or generate 16.96% 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. Richardson Electronics
Performance |
| Timeline |
| Sunny Optical Technology |
| Richardson Electronics |
Sunny Optical and Richardson Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and Richardson Electronics
The main advantage of trading using opposite Sunny Optical and Richardson Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, Richardson Electronics 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 Richardson Electronics will offset losses from the drop in Richardson Electronics' long position.| Sunny Optical vs. Goosehead Insurance | Sunny Optical vs. Astral Foods Limited | Sunny Optical vs. AUSTEVOLL SEAFOOD | Sunny Optical vs. JJ SNACK FOODS |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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