Correlation Between Sunny Optical and X FAB
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and X FAB 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 X FAB 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 X FAB Silicon Foundries, you can compare the effects of market volatilities on Sunny Optical and X FAB 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 X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and X FAB.
Diversification Opportunities for Sunny Optical and X FAB
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sunny and XFB is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Sunny Optical i.e., Sunny Optical and X FAB go up and down completely randomly.
Pair Corralation between Sunny Optical and X FAB
Assuming the 90 days horizon Sunny Optical Technology is expected to generate 1.36 times more return on investment than X FAB. However, Sunny Optical is 1.36 times more volatile than X FAB Silicon Foundries. It trades about 0.25 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.21 per unit of risk. If you would invest 554.00 in Sunny Optical Technology on August 25, 2024 and sell it today you would earn a total of 131.00 from holding Sunny Optical Technology or generate 23.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Optical Technology vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Sunny Optical Technology |
| X FAB Silicon |
Sunny Optical and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and X FAB
The main advantage of trading using opposite Sunny Optical and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB'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 |
| X FAB vs. Boiron SA | X FAB vs. ON SEMICONDUCTOR | X FAB vs. Tianjin Capital Environmental | X FAB vs. Insteel Industries |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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