Correlation Between Sunny Optical and Mindflair Plc

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

Diversification Opportunities for Sunny Optical and Mindflair Plc

-0.4

Correlation Coefficient

Sunny Optical  Mindflair Plc

Very good diversification

The 3 months correlation between Sunny and Mindflair is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Mindflair Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mindflair Plc 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 Mindflair Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mindflair Plc has no effect on the direction of Sunny Optical i.e., Sunny Optical and Mindflair Plc go up and down completely randomly.

Pair Corralation between Sunny Optical and Mindflair Plc

Assuming the 90 days trading horizon Sunny Optical Technology is expected to generate 1.31 times more return on investment than Mindflair Plc. However, Sunny Optical is 1.31 times more volatile than Mindflair Plc. It trades about 0.13 of its potential returns per unit of risk. Mindflair Plc is currently generating about -0.21 per unit of risk. If you would invest  4,835  in Sunny Optical Technology on August 31, 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 Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Sunny Optical Technology  vs.  Mindflair Plc

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

Mindflair Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mindflair Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Sunny Optical and Mindflair Plc

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

The idea behind Sunny Optical Technology and Mindflair Plc 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 Transaction History module to view history of all your transactions and understand their impact on performance.