Correlation Between Sunny Optical and AUST AGRICULTURAL

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

Diversification Opportunities for Sunny Optical and AUST AGRICULTURAL

0.83

Correlation Coefficient

Sunny Optical  AUST AGRICULTURAL

Very poor diversification

The 3 months correlation between Sunny and AUST is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and AUST AGRICULTURAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUST AGRICULTURAL 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 AUST AGRICULTURAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUST AGRICULTURAL has no effect on the direction of Sunny Optical i.e., Sunny Optical and AUST AGRICULTURAL go up and down completely randomly.

Pair Corralation between Sunny Optical and AUST AGRICULTURAL

Assuming the 90 days horizon Sunny Optical Technology is expected to under-perform the AUST AGRICULTURAL. In addition to that, Sunny Optical is 2.57 times more volatile than AUST AGRICULTURAL. It trades about -0.13 of its total potential returns per unit of risk. AUST AGRICULTURAL is currently generating about -0.1 per unit of volatility. If you would invest  86.00  in AUST AGRICULTURAL on March 5, 2025 and sell it today you would lose (10.00) from holding AUST AGRICULTURAL or give up 11.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Sunny Optical Technology  vs.  AUST AGRICULTURAL

Sunny Optical Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sunny Optical Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in July 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

AUST AGRICULTURAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days AUST AGRICULTURAL 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.

Pair Trading with Sunny Optical and AUST AGRICULTURAL

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

The idea behind Sunny Optical Technology and AUST AGRICULTURAL 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.