Correlation Between Sunny Optical and Sealed Air

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

Diversification Opportunities for Sunny Optical and Sealed Air

0.63

Correlation Coefficient

Sunny Optical  Sealed Air

Poor diversification

The 3 months correlation between Sunny and Sealed is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Sealed Air Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air Corp 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 Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air Corp has no effect on the direction of Sunny Optical i.e., Sunny Optical and Sealed Air go up and down completely randomly.

Pair Corralation between Sunny Optical and Sealed Air

Assuming the 90 days trading horizon Sunny Optical Technology is expected to generate 2.75 times more return on investment than Sealed Air. However, Sunny Optical is 2.75 times more volatile than Sealed Air Corp. It trades about 0.13 of its potential returns per unit of risk. Sealed Air Corp is currently generating about 0.07 per unit of risk. If you would invest  4,835  in Sunny Optical Technology on September 2, 2024 and sell it today you would earn a total of  1,475  from holding Sunny Optical Technology or generate 30.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.91%
Values	Daily Returns

Sunny Optical Technology  vs.  Sealed Air Corp

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. 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.

Sealed Air Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sealed Air Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sealed Air may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sunny Optical and Sealed Air

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

The idea behind Sunny Optical Technology and Sealed Air Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.