Correlation Between SENECA FOODS-A and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A 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 SENECA FOODS-A and Sunny Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SENECA FOODS A and Sunny Optical Technology, you can compare the effects of market volatilities on SENECA FOODS-A 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 SENECA FOODS-A with a short position of Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and Sunny Optical.
Diversification Opportunities for SENECA FOODS-A and Sunny Optical
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SENECA and Sunny is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A 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 SENECA FOODS-A 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 SENECA FOODS A 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 SENECA FOODS-A i.e., SENECA FOODS-A and Sunny Optical go up and down completely randomly.
Pair Corralation between SENECA FOODS-A and Sunny Optical
Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 0.87 times more return on investment than Sunny Optical. However, SENECA FOODS A is 1.16 times less risky than Sunny Optical. It trades about 0.05 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 4,380 in SENECA FOODS A on September 1, 2024 and sell it today you would earn a total of 2,070 from holding SENECA FOODS A or generate 47.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SENECA FOODS A vs. Sunny Optical Technology
Performance |
| Timeline |
| SENECA FOODS A |
| Sunny Optical Technology |
SENECA FOODS-A and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SENECA FOODS-A and Sunny Optical
The main advantage of trading using opposite SENECA FOODS-A and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS-A 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.| SENECA FOODS-A vs. SIVERS SEMICONDUCTORS AB | SENECA FOODS-A vs. Darden Restaurants | SENECA FOODS-A vs. Reliance Steel Aluminum | SENECA FOODS-A vs. Q2M Managementberatung AG |
| Sunny Optical vs. Altair Engineering | Sunny Optical vs. MGIC INVESTMENT | Sunny Optical vs. PennyMac Mortgage Investment | Sunny Optical vs. REGAL ASIAN INVESTMENTS |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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