Correlation Between Sui and IExec
Can any of the company-specific risk be diversified away by investing in both Sui and IExec 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 Sui and IExec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sui and iExec, you can compare the effects of market volatilities on Sui and IExec 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 Sui with a short position of IExec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sui and IExec.
Diversification Opportunities for Sui and IExec
Poor diversification
The 3 months correlation between Sui and IExec is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sui and iExec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iExec and Sui 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 Sui are associated (or correlated) with IExec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iExec has no effect on the direction of Sui i.e., Sui and IExec go up and down completely randomly.
Pair Corralation between Sui and IExec
Assuming the 90 days trading horizon Sui is expected to generate 0.64 times more return on investment than IExec. However, Sui is 1.56 times less risky than IExec. It trades about 0.15 of its potential returns per unit of risk. iExec is currently generating about 0.06 per unit of risk. If you would invest 106.00 in Sui on August 30, 2024 and sell it today you would earn a total of 239.00 from holding Sui or generate 225.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 46.15% |
| Values | Daily Returns |
Sui vs. iExec
Performance |
| Timeline |
| Sui |
| iExec |
Sui and IExec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sui and IExec
The main advantage of trading using opposite Sui and IExec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sui position performs unexpectedly, IExec 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 IExec will offset losses from the drop in IExec's long position.The idea behind Sui and iExec 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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