Correlation Between CyberArk Software and Sunny Optical

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

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

Diversification Opportunities for CyberArk Software and Sunny Optical

0.74

Correlation Coefficient

CyberArk Software  Sunny Optical

Poor diversification

The 3 months correlation between CyberArk and Sunny is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CyberArk Software 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 CyberArk Software 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 CyberArk Software 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 CyberArk Software i.e., CyberArk Software and Sunny Optical go up and down completely randomly.

Pair Corralation between CyberArk Software and Sunny Optical

Assuming the 90 days trading horizon CyberArk Software is expected to generate 4.04 times less return on investment than Sunny Optical. But when comparing it to its historical volatility, CyberArk Software is 1.24 times less risky than Sunny Optical. It trades about 0.1 of its potential returns per unit of risk. Sunny Optical Technology is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  554.00  in Sunny Optical Technology on September 24, 2024 and sell it today you would earn a total of  316.00  from holding Sunny Optical Technology or generate 57.04% return on investment over 90 days.

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

CyberArk Software  vs.  Sunny Optical Technology

CyberArk Software

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CyberArk Software are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CyberArk Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sunny Optical Technology

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Optical Technology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Sunny Optical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CyberArk Software and Sunny Optical

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

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.