Correlation Between Near and Sui
Can any of the company-specific risk be diversified away by investing in both Near and Sui 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 Near and Sui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Near and Sui, you can compare the effects of market volatilities on Near and Sui 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 Near with a short position of Sui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Near and Sui.
Diversification Opportunities for Near and Sui
Poor diversification
The 3 months correlation between Near and Sui is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Near and Sui in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sui and Near 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 Near are associated (or correlated) with Sui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sui has no effect on the direction of Near i.e., Near and Sui go up and down completely randomly.
Pair Corralation between Near and Sui
Assuming the 90 days trading horizon Near is expected to generate 2.51 times less return on investment than Sui. But when comparing it to its historical volatility, Near is 1.28 times less risky than Sui. It trades about 0.2 of its potential returns per unit of risk. Sui is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 198.00 in Sui on August 23, 2024 and sell it today you would earn a total of 165.00 from holding Sui or generate 83.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Near vs. Sui
Performance |
| Timeline |
| Near |
| Sui |
Near and Sui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Near and Sui
The main advantage of trading using opposite Near and Sui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Near position performs unexpectedly, Sui 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 Sui will offset losses from the drop in Sui's long position.The idea behind Near and Sui 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.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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