Correlation Between Sunny Optical and Golden Agri-Resources

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

Diversification Opportunities for Sunny Optical and Golden Agri-Resources

-0.38

Correlation Coefficient

Sunny Optical  Golden Agri-Resources

Very good diversification

The 3 months correlation between Sunny and Golden is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Golden Agri Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Agri Resources 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 Golden Agri-Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Agri Resources has no effect on the direction of Sunny Optical i.e., Sunny Optical and Golden Agri-Resources go up and down completely randomly.

Pair Corralation between Sunny Optical and Golden Agri-Resources

Assuming the 90 days horizon Sunny Optical Technology is expected to generate 0.91 times more return on investment than Golden Agri-Resources. However, Sunny Optical Technology is 1.1 times less risky than Golden Agri-Resources. It trades about 0.2 of its potential returns per unit of risk. Golden Agri Resources is currently generating about -0.04 per unit of risk. If you would invest  509.00  in Sunny Optical Technology on March 28, 2024 and sell it today you would earn a total of  76.00  from holding Sunny Optical Technology or generate 14.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.0%
Values	Daily Returns

Sunny Optical Technology  vs.  Golden Agri Resources

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 uncertain basic indicators, Sunny Optical reported solid returns over the last few months and may actually be approaching a breakup point.

Golden Agri Resources

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Agri Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Golden Agri-Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunny Optical and Golden Agri-Resources

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

The idea behind Sunny Optical Technology and Golden Agri Resources 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.