Correlation Between National Health and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both National Health and Sunny Optical 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 National Health and Sunny Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Health Investors and Sunny Optical Technology, you can compare the effects of market volatilities on National Health and Sunny Optical 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 National Health with a short position of Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and Sunny Optical.
Diversification Opportunities for National Health and Sunny Optical
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between National and Sunny is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and Sunny Optical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Optical Technology and National Health 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 National Health Investors are associated (or correlated) with Sunny Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Optical Technology has no effect on the direction of National Health i.e., National Health and Sunny Optical go up and down completely randomly.
Pair Corralation between National Health and Sunny Optical
Assuming the 90 days horizon National Health Investors is expected to generate 0.37 times more return on investment than Sunny Optical. However, National Health Investors is 2.71 times less risky than Sunny Optical. It trades about 0.1 of its potential returns per unit of risk. Sunny Optical Technology is currently generating about 0.01 per unit of risk. If you would invest 4,385 in National Health Investors on September 2, 2024 and sell it today you would earn a total of 2,815 from holding National Health Investors or generate 64.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. Sunny Optical Technology
Performance |
| Timeline |
| National Health Investors |
| Sunny Optical Technology |
National Health and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and Sunny Optical
The main advantage of trading using opposite National Health and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, Sunny Optical 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 Sunny Optical will offset losses from the drop in Sunny Optical's long position.| National Health vs. Dairy Farm International | National Health vs. Siamgas And Petrochemicals | National Health vs. United Natural Foods | National Health vs. CHEMICAL INDUSTRIES |
| Sunny Optical vs. Richardson Electronics | Sunny Optical vs. EAGLE MATERIALS | Sunny Optical vs. Goodyear Tire Rubber | Sunny Optical vs. Zoom Video Communications |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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