Correlation Between Birks and SunCar Technology
Can any of the company-specific risk be diversified away by investing in both Birks and SunCar Technology 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 Birks and SunCar Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Birks Group and SunCar Technology Group, you can compare the effects of market volatilities on Birks and SunCar Technology 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 Birks with a short position of SunCar Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birks and SunCar Technology.
Diversification Opportunities for Birks and SunCar Technology
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Birks and SunCar is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Birks Group and SunCar Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunCar Technology and Birks 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 Birks Group are associated (or correlated) with SunCar Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunCar Technology has no effect on the direction of Birks i.e., Birks and SunCar Technology go up and down completely randomly.
Pair Corralation between Birks and SunCar Technology
Considering the 90-day investment horizon Birks Group is expected to under-perform the SunCar Technology. But the stock apears to be less risky and, when comparing its historical volatility, Birks Group is 5.42 times less risky than SunCar Technology. The stock trades about -0.1 of its potential returns per unit of risk. The SunCar Technology Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5.73 in SunCar Technology Group on August 31, 2024 and sell it today you would earn a total of 29.27 from holding SunCar Technology Group or generate 510.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 79.44% |
| Values | Daily Returns |
Birks Group vs. SunCar Technology Group
Performance |
| Timeline |
| Birks Group |
| SunCar Technology |
Birks and SunCar Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Birks and SunCar Technology
The main advantage of trading using opposite Birks and SunCar Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birks position performs unexpectedly, SunCar Technology 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 SunCar Technology will offset losses from the drop in SunCar Technology's long position.The idea behind Birks Group and SunCar Technology Group 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.| SunCar Technology vs. Nascent Wine | SunCar Technology vs. Teleflex Incorporated | SunCar Technology vs. Oatly Group AB | SunCar Technology vs. Willamette Valley Vineyards |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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