Correlation Between Sunny Optical and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and Ross Stores 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 Ross Stores 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 Ross Stores, you can compare the effects of market volatilities on Sunny Optical and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Ross Stores.
Diversification Opportunities for Sunny Optical and Ross Stores
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunny and Ross is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Sunny Optical i.e., Sunny Optical and Ross Stores go up and down completely randomly.
Pair Corralation between Sunny Optical and Ross Stores
Assuming the 90 days horizon Sunny Optical Technology is expected to generate 2.44 times more return on investment than Ross Stores. However, Sunny Optical is 2.44 times more volatile than Ross Stores. It trades about 0.07 of its potential returns per unit of risk. Ross Stores is currently generating about 0.03 per unit of risk. If you would invest 552.00 in Sunny Optical Technology on November 3, 2024 and sell it today you would earn a total of 315.00 from holding Sunny Optical Technology or generate 57.07% 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. Ross Stores
Performance |
| Timeline |
| Sunny Optical Technology |
| Ross Stores |
Sunny Optical and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and Ross Stores
The main advantage of trading using opposite Sunny Optical and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| Sunny Optical vs. Charter Communications | Sunny Optical vs. Cognizant Technology Solutions | Sunny Optical vs. SK TELECOM TDADR | Sunny Optical vs. X FAB Silicon Foundries |
| Ross Stores vs. Insurance Australia Group | Ross Stores vs. Goodyear Tire Rubber | Ross Stores vs. ZURICH INSURANCE GROUP | Ross Stores vs. Direct Line Insurance |
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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