Correlation Between Pampa Metals and Sun Summit
Can any of the company-specific risk be diversified away by investing in both Pampa Metals 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 Pampa Metals and Sun Summit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pampa Metals and Sun Summit Minerals, you can compare the effects of market volatilities on Pampa Metals 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 Pampa Metals with a short position of Sun Summit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pampa Metals and Sun Summit.
Diversification Opportunities for Pampa Metals and Sun Summit
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pampa and Sun is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pampa Metals 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 Pampa Metals 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 Pampa Metals 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 Pampa Metals i.e., Pampa Metals and Sun Summit go up and down completely randomly.
Pair Corralation between Pampa Metals and Sun Summit
Assuming the 90 days horizon Pampa Metals is expected to under-perform the Sun Summit. But the otc stock apears to be less risky and, when comparing its historical volatility, Pampa Metals is 1.34 times less risky than Sun Summit. The otc stock trades about -0.03 of its potential returns per unit of risk. The Sun Summit Minerals is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Sun Summit Minerals on August 28, 2024 and sell it today you would lose (9.45) from holding Sun Summit Minerals or give up 49.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pampa Metals vs. Sun Summit Minerals
Performance |
| Timeline |
| Pampa Metals |
| Sun Summit Minerals |
Pampa Metals and Sun Summit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pampa Metals and Sun Summit
The main advantage of trading using opposite Pampa Metals and Sun Summit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pampa Metals 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.The idea behind Pampa Metals and Sun Summit Minerals 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.| Sun Summit vs. Ascendant Resources | Sun Summit vs. Cantex Mine Development | Sun Summit vs. Amarc Resources | Sun Summit vs. Sterling Metals Corp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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