Correlation Between Sunny Optical and Adidas AG

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

Diversification Opportunities for Sunny Optical and Adidas AG

0.0

Correlation Coefficient

Sunny Optical  Adidas AG

Pay attention - limited upside

The 3 months correlation between Sunny and Adidas is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and adidas AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on adidas AG 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 Adidas AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of adidas AG has no effect on the direction of Sunny Optical i.e., Sunny Optical and Adidas AG go up and down completely randomly.

Pair Corralation between Sunny Optical and Adidas AG

If you would invest (100.00) in adidas AG on October 23, 2024 and sell it today you would earn a total of  100.00  from holding adidas AG or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sunny Optical Technology  vs.  adidas AG

Sunny Optical Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Optical Technology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Sunny Optical reported solid returns over the last few months and may actually be approaching a breakup point.

adidas AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days adidas AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Adidas AG is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sunny Optical and Adidas AG

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

The idea behind Sunny Optical Technology and adidas AG 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.