Correlation Between Sunny Optical and Murata Manufacturing

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

Diversification Opportunities for Sunny Optical and Murata Manufacturing

0.78

Correlation Coefficient

Sunny Optical  Murata Manufacturing

Poor diversification

The 3 months correlation between Sunny and Murata is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Murata Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murata Manufacturing 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 Murata Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murata Manufacturing has no effect on the direction of Sunny Optical i.e., Sunny Optical and Murata Manufacturing go up and down completely randomly.

Pair Corralation between Sunny Optical and Murata Manufacturing

Assuming the 90 days horizon Sunny Optical Technology is expected to generate 2.11 times more return on investment than Murata Manufacturing. However, Sunny Optical is 2.11 times more volatile than Murata Manufacturing Co. It trades about 0.03 of its potential returns per unit of risk. Murata Manufacturing Co is currently generating about 0.02 per unit of risk. If you would invest  857.00  in Sunny Optical Technology on December 29, 2024 and sell it today you would earn a total of  18.00  from holding Sunny Optical Technology or generate 2.1% return on investment over 90 days.

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

Sunny Optical Technology  vs.  Murata Manufacturing Co

Sunny Optical Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Optical Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sunny Optical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Murata Manufacturing

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Murata Manufacturing Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Murata Manufacturing is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sunny Optical and Murata Manufacturing

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

The idea behind Sunny Optical Technology and Murata Manufacturing Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.