Correlation Between Sunny Optical and Virtu Financial

Can any of the company-specific risk be diversified away by investing in both Sunny Optical and Virtu Financial 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 Virtu Financial 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 Virtu Financial, you can compare the effects of market volatilities on Sunny Optical and Virtu Financial 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 Virtu Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Virtu Financial.

Diversification Opportunities for Sunny Optical and Virtu Financial

-0.14

Correlation Coefficient

Sunny Optical  Virtu Financial

Good diversification

The 3 months correlation between Sunny and Virtu is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Virtu Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtu Financial 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 Virtu Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtu Financial has no effect on the direction of Sunny Optical i.e., Sunny Optical and Virtu Financial go up and down completely randomly.

Pair Corralation between Sunny Optical and Virtu Financial

Assuming the 90 days horizon Sunny Optical Technology is expected to generate 1.85 times more return on investment than Virtu Financial. However, Sunny Optical is 1.85 times more volatile than Virtu Financial. It trades about 0.07 of its potential returns per unit of risk. Virtu Financial is currently generating about 0.0 per unit of risk. If you would invest  865.00  in Sunny Optical Technology on December 19, 2024 and sell it today you would earn a total of  114.00  from holding Sunny Optical Technology or generate 13.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Sunny Optical Technology  vs.  Virtu Financial

Sunny Optical Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Optical Technology are ranked lower than 5 (%) 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.

Virtu Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtu Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Virtu Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sunny Optical and Virtu Financial

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

The idea behind Sunny Optical Technology and Virtu Financial 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.