Correlation Between Isetan Mitsukoshi and Sunny Optical

Can any of the company-specific risk be diversified away by investing in both Isetan Mitsukoshi 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 Isetan Mitsukoshi and Sunny Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Isetan Mitsukoshi Holdings and Sunny Optical Technology, you can compare the effects of market volatilities on Isetan Mitsukoshi 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 Isetan Mitsukoshi with a short position of Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Isetan Mitsukoshi and Sunny Optical.

Diversification Opportunities for Isetan Mitsukoshi and Sunny Optical

0.61

Correlation Coefficient

Isetan Mitsukoshi  Sunny Optical

Poor diversification

The 3 months correlation between Isetan and Sunny is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Isetan Mitsukoshi Holdings 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 Isetan Mitsukoshi 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 Isetan Mitsukoshi Holdings 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 Isetan Mitsukoshi i.e., Isetan Mitsukoshi and Sunny Optical go up and down completely randomly.

Pair Corralation between Isetan Mitsukoshi and Sunny Optical

Assuming the 90 days horizon Isetan Mitsukoshi Holdings is expected to generate 0.78 times more return on investment than Sunny Optical. However, Isetan Mitsukoshi Holdings is 1.29 times less risky than Sunny Optical. It trades about 0.04 of its potential returns per unit of risk. Sunny Optical Technology is currently generating about 0.0 per unit of risk. If you would invest  965.00  in Isetan Mitsukoshi Holdings on October 21, 2024 and sell it today you would earn a total of  515.00  from holding Isetan Mitsukoshi Holdings or generate 53.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Isetan Mitsukoshi Holdings  vs.  Sunny Optical Technology

Isetan Mitsukoshi

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Isetan Mitsukoshi Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Isetan Mitsukoshi reported solid returns over the last few months and may actually be approaching a breakup point.

Sunny Optical Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Optical Technology are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sunny Optical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Isetan Mitsukoshi and Sunny Optical

The main advantage of trading using opposite Isetan Mitsukoshi and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Isetan Mitsukoshi 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.

The idea behind Isetan Mitsukoshi Holdings and Sunny Optical Technology 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.