Correlation Between Sunny Optical and HEALTHCARE REAL

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

Diversification Opportunities for Sunny Optical and HEALTHCARE REAL

0.18

Correlation Coefficient

Sunny Optical  HEALTHCARE REAL

Average diversification

The 3 months correlation between Sunny and HEALTHCARE is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and HEALTHCARE REAL A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEALTHCARE REAL A 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 HEALTHCARE REAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEALTHCARE REAL A has no effect on the direction of Sunny Optical i.e., Sunny Optical and HEALTHCARE REAL go up and down completely randomly.

Pair Corralation between Sunny Optical and HEALTHCARE REAL

Assuming the 90 days horizon Sunny Optical Technology is expected to under-perform the HEALTHCARE REAL. In addition to that, Sunny Optical is 2.85 times more volatile than HEALTHCARE REAL A. It trades about -0.16 of its total potential returns per unit of risk. HEALTHCARE REAL A is currently generating about -0.24 per unit of volatility. If you would invest  1,620  in HEALTHCARE REAL A on October 23, 2024 and sell it today you would lose (60.00) from holding HEALTHCARE REAL A or give up 3.7% of portfolio value over 90 days.

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

Sunny Optical Technology  vs.  HEALTHCARE REAL A

Sunny Optical Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Optical Technology are ranked lower than 12 (%) 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.

HEALTHCARE REAL A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEALTHCARE REAL A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HEALTHCARE REAL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sunny Optical and HEALTHCARE REAL

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

The idea behind Sunny Optical Technology and HEALTHCARE REAL A 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.