Correlation Between Sunny Optical and Johnson Matthey

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

Diversification Opportunities for Sunny Optical and Johnson Matthey

0.0

Correlation Coefficient

Sunny Optical  Johnson Matthey

Pay attention - limited upside

The 3 months correlation between Sunny and Johnson is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Johnson Matthey PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Matthey PLC 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 Johnson Matthey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Matthey PLC has no effect on the direction of Sunny Optical i.e., Sunny Optical and Johnson Matthey go up and down completely randomly.

Pair Corralation between Sunny Optical and Johnson Matthey

If you would invest (100.00) in Johnson Matthey PLC on October 5, 2024 and sell it today you would earn a total of  100.00  from holding Johnson Matthey PLC or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sunny Optical Technology  vs.  Johnson Matthey PLC

Sunny Optical Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Optical Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sunny Optical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Johnson Matthey PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Johnson Matthey PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Sunny Optical and Johnson Matthey

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

The idea behind Sunny Optical Technology and Johnson Matthey PLC 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..