Correlation Between Sun Peak and South Pacific
Can any of the company-specific risk be diversified away by investing in both Sun Peak and South Pacific 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 Sun Peak and South Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Peak Metals and South Pacific Metals, you can compare the effects of market volatilities on Sun Peak and South Pacific 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 Sun Peak with a short position of South Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Peak and South Pacific.
Diversification Opportunities for Sun Peak and South Pacific
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sun and South is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sun Peak Metals and South Pacific Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Pacific Metals and Sun Peak 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 Sun Peak Metals are associated (or correlated) with South Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Pacific Metals has no effect on the direction of Sun Peak i.e., Sun Peak and South Pacific go up and down completely randomly.
Pair Corralation between Sun Peak and South Pacific
Assuming the 90 days trading horizon Sun Peak Metals is expected to under-perform the South Pacific. In addition to that, Sun Peak is 1.15 times more volatile than South Pacific Metals. It trades about -0.03 of its total potential returns per unit of risk. South Pacific Metals is currently generating about 0.11 per unit of volatility. If you would invest 45.00 in South Pacific Metals on November 6, 2024 and sell it today you would earn a total of 4.00 from holding South Pacific Metals or generate 8.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Peak Metals vs. South Pacific Metals
Performance |
| Timeline |
| Sun Peak Metals |
| South Pacific Metals |
Sun Peak and South Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Peak and South Pacific
The main advantage of trading using opposite Sun Peak and South Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Peak position performs unexpectedly, South Pacific 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 South Pacific will offset losses from the drop in South Pacific's long position.| Sun Peak vs. Verizon Communications CDR | Sun Peak vs. First National Financial | Sun Peak vs. Quorum Information Technologies | Sun Peak vs. Definity Financial Corp |
| South Pacific vs. Advent Wireless | South Pacific vs. Cogeco Communications | South Pacific vs. Network Media Group | South Pacific vs. Bird Construction |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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