Correlation Between Spire Healthcare and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both Spire Healthcare 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 Spire Healthcare and Sunny Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spire Healthcare Group and Sunny Optical Technology, you can compare the effects of market volatilities on Spire Healthcare 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 Spire Healthcare with a short position of Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Healthcare and Sunny Optical.
Diversification Opportunities for Spire Healthcare and Sunny Optical
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Spire and Sunny is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Spire Healthcare Group 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 Spire Healthcare 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 Spire Healthcare Group 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 Spire Healthcare i.e., Spire Healthcare and Sunny Optical go up and down completely randomly.
Pair Corralation between Spire Healthcare and Sunny Optical
Assuming the 90 days trading horizon Spire Healthcare is expected to generate 12.5 times less return on investment than Sunny Optical. But when comparing it to its historical volatility, Spire Healthcare Group is 3.4 times less risky than Sunny Optical. It trades about 0.04 of its potential returns per unit of risk. Sunny Optical Technology is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 6,505 in Sunny Optical Technology on December 3, 2024 and sell it today you would earn a total of 2,115 from holding Sunny Optical Technology or generate 32.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Spire Healthcare Group vs. Sunny Optical Technology
Performance |
Timeline |
Spire Healthcare |
Sunny Optical Technology |
Spire Healthcare and Sunny Optical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Spire Healthcare and Sunny Optical
The main advantage of trading using opposite Spire Healthcare and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Healthcare 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.Spire Healthcare vs. Intermediate Capital Group | Spire Healthcare vs. British American Tobacco | Spire Healthcare vs. PPHE Hotel Group | Spire Healthcare vs. Scandic Hotels Group |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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