Correlation Between CHINA SOUTHN and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both CHINA SOUTHN 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 CHINA SOUTHN and Sunny Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA SOUTHN AIR H and Sunny Optical Technology, you can compare the effects of market volatilities on CHINA SOUTHN 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 CHINA SOUTHN with a short position of Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA SOUTHN and Sunny Optical.
Diversification Opportunities for CHINA SOUTHN and Sunny Optical
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CHINA and Sunny is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding CHINA SOUTHN AIR H 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 CHINA SOUTHN 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 CHINA SOUTHN AIR H 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 CHINA SOUTHN i.e., CHINA SOUTHN and Sunny Optical go up and down completely randomly.
Pair Corralation between CHINA SOUTHN and Sunny Optical
Assuming the 90 days trading horizon CHINA SOUTHN is expected to generate 10.67 times less return on investment than Sunny Optical. But when comparing it to its historical volatility, CHINA SOUTHN AIR H is 1.07 times less risky than Sunny Optical. It trades about 0.02 of its potential returns per unit of risk. Sunny Optical Technology is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 753.00 in Sunny Optical Technology on October 30, 2024 and sell it today you would earn a total of 146.00 from holding Sunny Optical Technology or generate 19.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA SOUTHN AIR H vs. Sunny Optical Technology
Performance |
| Timeline |
| CHINA SOUTHN AIR |
| Sunny Optical Technology |
CHINA SOUTHN and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA SOUTHN and Sunny Optical
The main advantage of trading using opposite CHINA SOUTHN and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA SOUTHN 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.| CHINA SOUTHN vs. Gaming and Leisure | CHINA SOUTHN vs. PLAYTIKA HOLDING DL 01 | CHINA SOUTHN vs. Eidesvik Offshore ASA | CHINA SOUTHN vs. Universal Display |
| Sunny Optical vs. Diamyd Medical AB | Sunny Optical vs. Merit Medical Systems | Sunny Optical vs. Firan Technology Group | Sunny Optical vs. Amkor Technology |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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