Correlation Between Ecotel Communication and Sunny Optical

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

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

Diversification Opportunities for Ecotel Communication and Sunny Optical

-0.57

Correlation Coefficient

Ecotel Communication  Sunny Optical

Excellent diversification

The 3 months correlation between Ecotel and Sunny is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding ecotel communication ag 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 Ecotel Communication 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 ecotel communication ag 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 Ecotel Communication i.e., Ecotel Communication and Sunny Optical go up and down completely randomly.

Pair Corralation between Ecotel Communication and Sunny Optical

Assuming the 90 days trading horizon Ecotel Communication is expected to generate 12.84 times less return on investment than Sunny Optical. But when comparing it to its historical volatility, ecotel communication ag is 2.18 times less risky than Sunny Optical. It trades about 0.02 of its potential returns per unit of risk. Sunny Optical Technology is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  833.00  in Sunny Optical Technology on December 23, 2024 and sell it today you would earn a total of  148.00  from holding Sunny Optical Technology or generate 17.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ecotel communication ag  vs.  Sunny Optical Technology

ecotel communication

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ecotel communication ag are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Ecotel Communication is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Sunny Optical Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Optical Technology are ranked lower than 7 (%) 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 Ecotel Communication and Sunny Optical

The main advantage of trading using opposite Ecotel Communication and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecotel Communication 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 ecotel communication ag 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.