Correlation Between Sunny Optical and Neonode

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

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

Diversification Opportunities for Sunny Optical and Neonode

-0.43

Correlation Coefficient

Sunny Optical  Neonode

Very good diversification

The 3 months correlation between Sunny and Neonode is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Neonode in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neonode and Sunny Optical 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 Sunny Optical Technology are associated (or correlated) with Neonode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neonode has no effect on the direction of Sunny Optical i.e., Sunny Optical and Neonode go up and down completely randomly.

Pair Corralation between Sunny Optical and Neonode

Assuming the 90 days horizon Sunny Optical Technology is expected to generate 0.58 times more return on investment than Neonode. However, Sunny Optical Technology is 1.72 times less risky than Neonode. It trades about 0.17 of its potential returns per unit of risk. Neonode is currently generating about 0.02 per unit of risk. If you would invest  5,561  in Sunny Optical Technology on September 16, 2024 and sell it today you would earn a total of  3,108  from holding Sunny Optical Technology or generate 55.89% return on investment over 90 days.

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

Sunny Optical Technology  vs.  Neonode

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 fairly uncertain technical and fundamental indicators, Sunny Optical showed solid returns over the last few months and may actually be approaching a breakup point.

Neonode

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Neonode are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Neonode may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sunny Optical and Neonode

The main advantage of trading using opposite Sunny Optical and Neonode positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, Neonode 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 Neonode will offset losses from the drop in Neonode's long position.

The idea behind Sunny Optical Technology and Neonode 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.