Correlation Between Sunny Optical and TAMURA CORP

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

Diversification Opportunities for Sunny Optical and TAMURA CORP

-0.64

Correlation Coefficient

Sunny Optical  TAMURA CORP

Excellent diversification

The 3 months correlation between Sunny and TAMURA is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and TAMURA P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAMURA CORP 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 TAMURA CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAMURA CORP has no effect on the direction of Sunny Optical i.e., Sunny Optical and TAMURA CORP go up and down completely randomly.

Pair Corralation between Sunny Optical and TAMURA CORP

Assuming the 90 days horizon Sunny Optical Technology is expected to generate 1.73 times more return on investment than TAMURA CORP. However, Sunny Optical is 1.73 times more volatile than TAMURA P. It trades about 0.01 of its potential returns per unit of risk. TAMURA P is currently generating about -0.02 per unit of risk. If you would invest  877.00  in Sunny Optical Technology on October 22, 2024 and sell it today you would lose (104.00) from holding Sunny Optical Technology or give up 11.86% of portfolio value over 90 days.

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

Sunny Optical Technology  vs.  TAMURA P

Sunny Optical Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Optical Technology are ranked lower than 11 (%) 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.

TAMURA CORP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TAMURA P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Sunny Optical and TAMURA CORP

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

The idea behind Sunny Optical Technology and TAMURA P 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.