Correlation Between Sunny Optical and Blackstone Loan

Can any of the company-specific risk be diversified away by investing in both Sunny Optical and Blackstone Loan 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 Blackstone Loan 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 Blackstone Loan Financing, you can compare the effects of market volatilities on Sunny Optical and Blackstone Loan 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 Blackstone Loan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Blackstone Loan.

Diversification Opportunities for Sunny Optical and Blackstone Loan

0.75

Correlation Coefficient

Sunny Optical  Blackstone Loan

Poor diversification

The 3 months correlation between Sunny and Blackstone is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Blackstone Loan Financing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Loan Financing 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 Blackstone Loan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackstone Loan Financing has no effect on the direction of Sunny Optical i.e., Sunny Optical and Blackstone Loan go up and down completely randomly.

Pair Corralation between Sunny Optical and Blackstone Loan

Assuming the 90 days trading horizon Sunny Optical Technology is expected to generate 3.31 times more return on investment than Blackstone Loan. However, Sunny Optical is 3.31 times more volatile than Blackstone Loan Financing. It trades about 0.12 of its potential returns per unit of risk. Blackstone Loan Financing is currently generating about 0.05 per unit of risk. If you would invest  5,530  in Sunny Optical Technology on October 20, 2024 and sell it today you would earn a total of  745.00  from holding Sunny Optical Technology or generate 13.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	92.86%
Values	Daily Returns

Sunny Optical Technology  vs.  Blackstone Loan Financing

Sunny Optical Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Optical Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sunny Optical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Blackstone Loan Financing

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Loan Financing are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Blackstone Loan unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunny Optical and Blackstone Loan

The main advantage of trading using opposite Sunny Optical and Blackstone Loan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, Blackstone Loan 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 Blackstone Loan will offset losses from the drop in Blackstone Loan's long position.

The idea behind Sunny Optical Technology and Blackstone Loan Financing pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.