Correlation Between Sunny Optical and Sempra

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

Diversification Opportunities for Sunny Optical and Sempra

0.6

Correlation Coefficient

Sunny Optical  Sempra

Poor diversification

The 3 months correlation between Sunny and Sempra is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Sempra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sempra 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 Sempra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sempra has no effect on the direction of Sunny Optical i.e., Sunny Optical and Sempra go up and down completely randomly.

Pair Corralation between Sunny Optical and Sempra

Assuming the 90 days horizon Sunny Optical Technology is expected to generate 2.35 times more return on investment than Sempra. However, Sunny Optical is 2.35 times more volatile than Sempra. It trades about 0.12 of its potential returns per unit of risk. Sempra is currently generating about 0.14 per unit of risk. If you would invest  654.00  in Sunny Optical Technology on September 29, 2024 and sell it today you would earn a total of  179.00  from holding Sunny Optical Technology or generate 27.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Sunny Optical Technology  vs.  Sempra

Sunny Optical Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Optical Technology are ranked lower than 9 (%) 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.

Sempra

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sempra are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sempra reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunny Optical and Sempra

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

The idea behind Sunny Optical Technology and Sempra 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.