Correlation Between Sunny Optical and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and INDOFOOD AGRI 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 INDOFOOD AGRI 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 INDOFOOD AGRI RES, you can compare the effects of market volatilities on Sunny Optical and INDOFOOD AGRI 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 INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and INDOFOOD AGRI.
Diversification Opportunities for Sunny Optical and INDOFOOD AGRI
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sunny and INDOFOOD is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and INDOFOOD AGRI RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOFOOD AGRI RES 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 INDOFOOD AGRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDOFOOD AGRI RES has no effect on the direction of Sunny Optical i.e., Sunny Optical and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between Sunny Optical and INDOFOOD AGRI
Assuming the 90 days horizon Sunny Optical Technology is expected to generate 1.76 times more return on investment than INDOFOOD AGRI. However, Sunny Optical is 1.76 times more volatile than INDOFOOD AGRI RES. It trades about 0.14 of its potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about 0.05 per unit of risk. If you would invest 641.00 in Sunny Optical Technology on October 8, 2024 and sell it today you would earn a total of 181.00 from holding Sunny Optical Technology or generate 28.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sunny Optical Technology vs. INDOFOOD AGRI RES
Performance |
Timeline |
Sunny Optical Technology |
INDOFOOD AGRI RES |
Sunny Optical and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sunny Optical and INDOFOOD AGRI
The main advantage of trading using opposite Sunny Optical and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, INDOFOOD AGRI 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 INDOFOOD AGRI will offset losses from the drop in INDOFOOD AGRI's long position.Sunny Optical vs. ULTRA CLEAN HLDGS | Sunny Optical vs. MCEWEN MINING INC | Sunny Optical vs. Monster Beverage Corp | Sunny Optical vs. INDUSTRIAL MINERALS LTD |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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