Correlation Between Creo Medical and Sunny Optical

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

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

Diversification Opportunities for Creo Medical and Sunny Optical

-0.3

Correlation Coefficient

Creo Medical  Sunny Optical

Very good diversification

The 3 months correlation between Creo and Sunny is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Creo Medical Group 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 Creo Medical 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 Creo Medical Group 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 Creo Medical i.e., Creo Medical and Sunny Optical go up and down completely randomly.

Pair Corralation between Creo Medical and Sunny Optical

Assuming the 90 days trading horizon Creo Medical Group is expected to generate 1.2 times more return on investment than Sunny Optical. However, Creo Medical is 1.2 times more volatile than Sunny Optical Technology. It trades about 0.02 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  1,963  in Creo Medical Group on October 26, 2024 and sell it today you would lose (83.00) from holding Creo Medical Group or give up 4.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.77%
Values	Daily Returns

Creo Medical Group  vs.  Sunny Optical Technology

Creo Medical Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Creo Medical Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Sunny Optical Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Optical Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Sunny Optical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Creo Medical and Sunny Optical

The main advantage of trading using opposite Creo Medical and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Creo Medical 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 Creo Medical Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.