Correlation Between Sunny Optical and CSL

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

Diversification Opportunities for Sunny Optical and CSL

-0.71

Correlation Coefficient

Sunny Optical  CSL

Pay attention - limited upside

The 3 months correlation between Sunny and CSL is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and CSL LTD SPONADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL LTD SPONADR 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 CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL LTD SPONADR has no effect on the direction of Sunny Optical i.e., Sunny Optical and CSL go up and down completely randomly.

Pair Corralation between Sunny Optical and CSL

Assuming the 90 days horizon Sunny Optical Technology is expected to generate 2.87 times more return on investment than CSL. However, Sunny Optical is 2.87 times more volatile than CSL LTD SPONADR. It trades about 0.05 of its potential returns per unit of risk. CSL LTD SPONADR is currently generating about 0.07 per unit of risk. If you would invest  807.00  in Sunny Optical Technology on October 9, 2024 and sell it today you would earn a total of  15.00  from holding Sunny Optical Technology or generate 1.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.12%
Values	Daily Returns

Sunny Optical Technology  vs.  CSL LTD SPONADR

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 uncertain basic indicators, Sunny Optical reported solid returns over the last few months and may actually be approaching a breakup point.

CSL LTD SPONADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSL LTD SPONADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking indicators, CSL 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 CSL

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

The idea behind Sunny Optical Technology and CSL LTD SPONADR 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.