Correlation Between Sunny Optical and TDK
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and TDK 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 TDK 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 TDK Corporation, you can compare the effects of market volatilities on Sunny Optical and TDK 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 TDK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and TDK.
Diversification Opportunities for Sunny Optical and TDK
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sunny and TDK is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and TDK Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TDK Corporation 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 TDK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TDK Corporation has no effect on the direction of Sunny Optical i.e., Sunny Optical and TDK go up and down completely randomly.
Pair Corralation between Sunny Optical and TDK
Assuming the 90 days horizon Sunny Optical Technology is expected to generate 1.71 times more return on investment than TDK. However, Sunny Optical is 1.71 times more volatile than TDK Corporation. It trades about 0.23 of its potential returns per unit of risk. TDK Corporation is currently generating about 0.08 per unit of risk. If you would invest 578.00 in Sunny Optical Technology on August 28, 2024 and sell it today you would earn a total of 124.00 from holding Sunny Optical Technology or generate 21.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Optical Technology vs. TDK Corp.
Performance |
| Timeline |
| Sunny Optical Technology |
| TDK Corporation |
Sunny Optical and TDK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and TDK
The main advantage of trading using opposite Sunny Optical and TDK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, TDK 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 TDK will offset losses from the drop in TDK's long position.The idea behind Sunny Optical Technology and TDK Corporation 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.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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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