Correlation Between Northern Data and Sunny Optical

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

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

Diversification Opportunities for Northern Data and Sunny Optical

-0.47

Correlation Coefficient

Northern Data  Sunny Optical

Very good diversification

The 3 months correlation between Northern and Sunny is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Northern Data 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 Northern Data 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 Northern Data 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 Northern Data i.e., Northern Data and Sunny Optical go up and down completely randomly.

Pair Corralation between Northern Data and Sunny Optical

Assuming the 90 days trading horizon Northern Data AG is expected to under-perform the Sunny Optical. In addition to that, Northern Data is 1.01 times more volatile than Sunny Optical Technology. It trades about -0.21 of its total potential returns per unit of risk. Sunny Optical Technology is currently generating about 0.09 per unit of volatility. 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

Northern Data AG  vs.  Sunny Optical Technology

Northern Data AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Northern Data AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm 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 Northern Data and Sunny Optical

The main advantage of trading using opposite Northern Data and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Data 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 Northern Data 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.