Correlation Between INFORMATION SVC and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both INFORMATION SVC 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 INFORMATION SVC and Sunny Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INFORMATION SVC GRP and Sunny Optical Technology, you can compare the effects of market volatilities on INFORMATION SVC 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 INFORMATION SVC with a short position of Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of INFORMATION SVC and Sunny Optical.
Diversification Opportunities for INFORMATION SVC and Sunny Optical
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INFORMATION and Sunny is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding INFORMATION SVC GRP 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 INFORMATION SVC 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 INFORMATION SVC GRP 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 INFORMATION SVC i.e., INFORMATION SVC and Sunny Optical go up and down completely randomly.
Pair Corralation between INFORMATION SVC and Sunny Optical
Assuming the 90 days horizon INFORMATION SVC GRP is expected to under-perform the Sunny Optical. But the stock apears to be less risky and, when comparing its historical volatility, INFORMATION SVC GRP is 1.66 times less risky than Sunny Optical. The stock trades about -0.02 of its potential returns per unit of risk. The Sunny Optical Technology is currently generating about 0.01 of returns per unit of risk over similar time horizon. 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 |
INFORMATION SVC GRP vs. Sunny Optical Technology
Performance |
| Timeline |
| INFORMATION SVC GRP |
| Sunny Optical Technology |
INFORMATION SVC and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INFORMATION SVC and Sunny Optical
The main advantage of trading using opposite INFORMATION SVC and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INFORMATION SVC 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.| INFORMATION SVC vs. Alfa Financial Software | INFORMATION SVC vs. Meli Hotels International | INFORMATION SVC vs. MIRAMAR HOTEL INV | INFORMATION SVC vs. Hyatt Hotels |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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