Correlation Between Sunny Optical and Monument Mining

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

Diversification Opportunities for Sunny Optical and Monument Mining

0.53

Correlation Coefficient

Sunny Optical  Monument Mining

Very weak diversification

The 3 months correlation between Sunny and Monument is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Monument Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monument Mining 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 Monument Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monument Mining has no effect on the direction of Sunny Optical i.e., Sunny Optical and Monument Mining go up and down completely randomly.

Pair Corralation between Sunny Optical and Monument Mining

Assuming the 90 days horizon Sunny Optical is expected to generate 1.27 times less return on investment than Monument Mining. But when comparing it to its historical volatility, Sunny Optical Technology is 1.31 times less risky than Monument Mining. It trades about 0.11 of its potential returns per unit of risk. Monument Mining Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Monument Mining Limited on December 21, 2024 and sell it today you would earn a total of  5.00  from holding Monument Mining Limited or generate 26.32% return on investment over 90 days.

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

Sunny Optical Technology  vs.  Monument Mining Limited

Sunny Optical Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Optical Technology are ranked lower than 8 (%) 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.

Monument Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monument Mining Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Monument Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunny Optical and Monument Mining

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

The idea behind Sunny Optical Technology and Monument Mining Limited 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.