Correlation Between Canstar Resources and Sun Summit
Can any of the company-specific risk be diversified away by investing in both Canstar Resources and Sun Summit 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 Canstar Resources and Sun Summit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canstar Resources and Sun Summit Minerals, you can compare the effects of market volatilities on Canstar Resources and Sun Summit 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 Canstar Resources with a short position of Sun Summit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canstar Resources and Sun Summit.
Diversification Opportunities for Canstar Resources and Sun Summit
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Canstar and Sun is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Canstar Resources and Sun Summit Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Summit Minerals and Canstar Resources 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 Canstar Resources are associated (or correlated) with Sun Summit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Summit Minerals has no effect on the direction of Canstar Resources i.e., Canstar Resources and Sun Summit go up and down completely randomly.
Pair Corralation between Canstar Resources and Sun Summit
Assuming the 90 days horizon Canstar Resources is expected to generate 3.25 times less return on investment than Sun Summit. But when comparing it to its historical volatility, Canstar Resources is 1.63 times less risky than Sun Summit. It trades about 0.03 of its potential returns per unit of risk. Sun Summit Minerals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8.11 in Sun Summit Minerals on September 1, 2024 and sell it today you would earn a total of 0.43 from holding Sun Summit Minerals or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 89.09% |
| Values | Daily Returns |
Canstar Resources vs. Sun Summit Minerals
Performance |
| Timeline |
| Canstar Resources |
| Sun Summit Minerals |
Canstar Resources and Sun Summit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canstar Resources and Sun Summit
The main advantage of trading using opposite Canstar Resources and Sun Summit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canstar Resources position performs unexpectedly, Sun Summit 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 Sun Summit will offset losses from the drop in Sun Summit's long position.| Canstar Resources vs. Kenorland Minerals | Canstar Resources vs. Prime Mining Corp | Canstar Resources vs. Euro Manganese | Canstar Resources vs. Chalice Mining Limited |
| Sun Summit vs. South32 Limited | Sun Summit vs. NioCorp Developments Ltd | Sun Summit vs. HUMANA INC | Sun Summit vs. SCOR PK |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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