Correlation Between Rock Tech and Sunny Optical

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

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

Diversification Opportunities for Rock Tech and Sunny Optical

-0.68

Correlation Coefficient

Rock Tech  Sunny Optical

Excellent diversification

The 3 months correlation between Rock and Sunny is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Rock Tech Lithium 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 Rock Tech 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 Rock Tech Lithium 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 Rock Tech i.e., Rock Tech and Sunny Optical go up and down completely randomly.

Pair Corralation between Rock Tech and Sunny Optical

Assuming the 90 days trading horizon Rock Tech Lithium is expected to under-perform the Sunny Optical. In addition to that, Rock Tech is 1.21 times more volatile than Sunny Optical Technology. It trades about -0.01 of its total potential returns per unit of risk. Sunny Optical Technology is currently generating about 0.0 per unit of volatility. If you would invest  1,119  in Sunny Optical Technology on October 11, 2024 and sell it today you would lose (302.00) from holding Sunny Optical Technology or give up 26.99% of portfolio value over 90 days.

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

Rock Tech Lithium  vs.  Sunny Optical Technology

Rock Tech Lithium

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rock Tech Lithium are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Rock Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sunny Optical Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Optical Technology are ranked lower than 10 (%) 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 Rock Tech and Sunny Optical

The main advantage of trading using opposite Rock Tech and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rock Tech 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 Rock Tech Lithium 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.