Correlation Between Sun Pacific and Appswarm
Can any of the company-specific risk be diversified away by investing in both Sun Pacific and Appswarm 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 Pacific and Appswarm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Pacific Holding and Appswarm, you can compare the effects of market volatilities on Sun Pacific and Appswarm 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 Pacific with a short position of Appswarm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Pacific and Appswarm.
Diversification Opportunities for Sun Pacific and Appswarm
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sun and Appswarm is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sun Pacific Holding and Appswarm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appswarm and Sun Pacific 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 Pacific Holding are associated (or correlated) with Appswarm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appswarm has no effect on the direction of Sun Pacific i.e., Sun Pacific and Appswarm go up and down completely randomly.
Pair Corralation between Sun Pacific and Appswarm
Given the investment horizon of 90 days Sun Pacific Holding is expected to generate 1.35 times more return on investment than Appswarm. However, Sun Pacific is 1.35 times more volatile than Appswarm. It trades about 0.26 of its potential returns per unit of risk. Appswarm is currently generating about -0.22 per unit of risk. If you would invest 138.00 in Sun Pacific Holding on August 28, 2024 and sell it today you would earn a total of 75.00 from holding Sun Pacific Holding or generate 54.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Pacific Holding vs. Appswarm
Performance |
| Timeline |
| Sun Pacific Holding |
| Appswarm |
Sun Pacific and Appswarm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Pacific and Appswarm
The main advantage of trading using opposite Sun Pacific and Appswarm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Pacific position performs unexpectedly, Appswarm 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 Appswarm will offset losses from the drop in Appswarm's long position.The idea behind Sun Pacific Holding and Appswarm 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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