Correlation Between Sunny Optical and National Retail

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

Diversification Opportunities for Sunny Optical and National Retail

-0.61

Correlation Coefficient

Sunny Optical  National Retail

Excellent diversification

The 3 months correlation between Sunny and National is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and National Retail Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Retail Prop 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 National Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Retail Prop has no effect on the direction of Sunny Optical i.e., Sunny Optical and National Retail go up and down completely randomly.

Pair Corralation between Sunny Optical and National Retail

Assuming the 90 days horizon Sunny Optical Technology is expected to generate 2.61 times more return on investment than National Retail. However, Sunny Optical is 2.61 times more volatile than National Retail Properties. It trades about 0.24 of its potential returns per unit of risk. National Retail Properties is currently generating about 0.04 per unit of risk. If you would invest  634.00  in Sunny Optical Technology on October 8, 2024 and sell it today you would earn a total of  188.00  from holding Sunny Optical Technology or generate 29.65% return on investment over 90 days.

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

Sunny Optical Technology  vs.  National Retail Properties

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

National Retail Prop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Retail Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Sunny Optical and National Retail

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

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