Correlation Between Sunny Optical and LIFENET INSURANCE

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

Diversification Opportunities for Sunny Optical and LIFENET INSURANCE

0.04

Correlation Coefficient

Sunny Optical  LIFENET INSURANCE

Significant diversification

The 3 months correlation between Sunny and LIFENET is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and LIFENET INSURANCE CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFENET INSURANCE 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 LIFENET INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFENET INSURANCE has no effect on the direction of Sunny Optical i.e., Sunny Optical and LIFENET INSURANCE go up and down completely randomly.

Pair Corralation between Sunny Optical and LIFENET INSURANCE

Assuming the 90 days horizon Sunny Optical is expected to generate 291.67 times less return on investment than LIFENET INSURANCE. In addition to that, Sunny Optical is 1.32 times more volatile than LIFENET INSURANCE CO. It trades about 0.0 of its total potential returns per unit of risk. LIFENET INSURANCE CO is currently generating about 0.03 per unit of volatility. If you would invest  825.00  in LIFENET INSURANCE CO on October 10, 2024 and sell it today you would earn a total of  245.00  from holding LIFENET INSURANCE CO or generate 29.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Sunny Optical Technology  vs.  LIFENET INSURANCE CO

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.

LIFENET INSURANCE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LIFENET INSURANCE CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, LIFENET INSURANCE 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 LIFENET INSURANCE

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

The idea behind Sunny Optical Technology and LIFENET INSURANCE CO 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.