Correlation Between Litigation Capital and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both Litigation Capital 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 Litigation Capital and Sunny Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Litigation Capital Management and Sunny Optical Technology, you can compare the effects of market volatilities on Litigation Capital 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 Litigation Capital with a short position of Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litigation Capital and Sunny Optical.
Diversification Opportunities for Litigation Capital and Sunny Optical
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Litigation and Sunny is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Litigation Capital Management 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 Litigation Capital 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 Litigation Capital Management 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 Litigation Capital i.e., Litigation Capital and Sunny Optical go up and down completely randomly.
Pair Corralation between Litigation Capital and Sunny Optical
Assuming the 90 days trading horizon Litigation Capital is expected to generate 3.91 times less return on investment than Sunny Optical. But when comparing it to its historical volatility, Litigation Capital Management is 1.51 times less risky than Sunny Optical. It trades about 0.07 of its potential returns per unit of risk. Sunny Optical Technology is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,380 in Sunny Optical Technology on September 12, 2024 and sell it today you would earn a total of 2,140 from holding Sunny Optical Technology or generate 48.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.46% |
Values | Daily Returns |
Litigation Capital Management vs. Sunny Optical Technology
Performance |
Timeline |
Litigation Capital |
Sunny Optical Technology |
Litigation Capital and Sunny Optical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Litigation Capital and Sunny Optical
The main advantage of trading using opposite Litigation Capital and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litigation Capital 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.Litigation Capital vs. Intuitive Investments Group | Litigation Capital vs. Universal Display Corp | Litigation Capital vs. Batm Advanced Communications | Litigation Capital vs. Arrow Electronics |
Sunny Optical vs. Catena Media PLC | Sunny Optical vs. Liberty Media Corp | Sunny Optical vs. Everyman Media Group | Sunny Optical vs. Grand Vision Media |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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