Correlation Between Sunny Optical and INFORMATION SVC
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and INFORMATION SVC 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 INFORMATION SVC 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 INFORMATION SVC GRP, you can compare the effects of market volatilities on Sunny Optical and INFORMATION SVC 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 INFORMATION SVC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and INFORMATION SVC.
Diversification Opportunities for Sunny Optical and INFORMATION SVC
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunny and INFORMATION is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and INFORMATION SVC GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INFORMATION SVC GRP 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 INFORMATION SVC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INFORMATION SVC GRP has no effect on the direction of Sunny Optical i.e., Sunny Optical and INFORMATION SVC go up and down completely randomly.
Pair Corralation between Sunny Optical and INFORMATION SVC
Assuming the 90 days horizon Sunny Optical Technology is expected to generate 1.66 times more return on investment than INFORMATION SVC. However, Sunny Optical is 1.66 times more volatile than INFORMATION SVC GRP. It trades about 0.01 of its potential returns per unit of risk. INFORMATION SVC GRP is currently generating about -0.02 per unit of risk. If you would invest 866.00 in Sunny Optical Technology on September 1, 2024 and sell it today you would lose (122.00) from holding Sunny Optical Technology or give up 14.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Optical Technology vs. INFORMATION SVC GRP
Performance |
| Timeline |
| Sunny Optical Technology |
| INFORMATION SVC GRP |
Sunny Optical and INFORMATION SVC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and INFORMATION SVC
The main advantage of trading using opposite Sunny Optical and INFORMATION SVC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, INFORMATION SVC 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 INFORMATION SVC will offset losses from the drop in INFORMATION SVC's long position.| Sunny Optical vs. Altair Engineering | Sunny Optical vs. MGIC INVESTMENT | Sunny Optical vs. PennyMac Mortgage Investment | Sunny Optical vs. REGAL ASIAN INVESTMENTS |
| INFORMATION SVC vs. Alfa Financial Software | INFORMATION SVC vs. Meli Hotels International | INFORMATION SVC vs. MIRAMAR HOTEL INV | INFORMATION SVC vs. Hyatt Hotels |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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