Correlation Between L3Harris Technologies and Sunny Optical

Can any of the company-specific risk be diversified away by investing in both L3Harris Technologies and Sunny Optical 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 L3Harris Technologies and Sunny Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between L3Harris Technologies and Sunny Optical Technology, you can compare the effects of market volatilities on L3Harris Technologies and Sunny Optical 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 L3Harris Technologies with a short position of Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of L3Harris Technologies and Sunny Optical.

Diversification Opportunities for L3Harris Technologies and Sunny Optical

-0.3

Correlation Coefficient

L3Harris Technologies  Sunny Optical

Very good diversification

The 3 months correlation between L3Harris and Sunny is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding L3Harris Technologies and Sunny Optical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Optical Technology and L3Harris Technologies 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 L3Harris Technologies are associated (or correlated) with Sunny Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Optical Technology has no effect on the direction of L3Harris Technologies i.e., L3Harris Technologies and Sunny Optical go up and down completely randomly.

Pair Corralation between L3Harris Technologies and Sunny Optical

Assuming the 90 days trading horizon L3Harris Technologies is expected to generate 0.41 times more return on investment than Sunny Optical. However, L3Harris Technologies is 2.44 times less risky than Sunny Optical. It trades about 0.02 of its potential returns per unit of risk. Sunny Optical Technology is currently generating about 0.0 per unit of risk. If you would invest  19,787  in L3Harris Technologies on September 20, 2024 and sell it today you would earn a total of  1,939  from holding L3Harris Technologies or generate 9.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.3%
Values	Daily Returns

L3Harris Technologies  vs.  Sunny Optical Technology

L3Harris Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days L3Harris Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Sunny Optical Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Optical Technology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sunny Optical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with L3Harris Technologies and Sunny Optical

The main advantage of trading using opposite L3Harris Technologies and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L3Harris Technologies position performs unexpectedly, Sunny Optical 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 Sunny Optical will offset losses from the drop in Sunny Optical's long position.

The idea behind L3Harris Technologies and Sunny Optical Technology 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.