Correlation Between SUPERC and PURA
Can any of the company-specific risk be diversified away by investing in both SUPERC and PURA 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 SUPERC and PURA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SUPERC and PURA, you can compare the effects of market volatilities on SUPERC and PURA 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 SUPERC with a short position of PURA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUPERC and PURA.
Diversification Opportunities for SUPERC and PURA
Excellent diversification
The 3 months correlation between SUPERC and PURA is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding SUPERC and PURA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PURA and SUPERC 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 SUPERC are associated (or correlated) with PURA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PURA has no effect on the direction of SUPERC i.e., SUPERC and PURA go up and down completely randomly.
Pair Corralation between SUPERC and PURA
Assuming the 90 days trading horizon SUPERC is expected to generate 2.67 times less return on investment than PURA. In addition to that, SUPERC is 1.44 times more volatile than PURA. It trades about 0.03 of its total potential returns per unit of risk. PURA is currently generating about 0.13 per unit of volatility. If you would invest 1.76 in PURA on August 23, 2024 and sell it today you would earn a total of 1.34 from holding PURA or generate 76.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SUPERC vs. PURA
Performance |
| Timeline |
| SUPERC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| PURA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SUPERC and PURA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SUPERC and PURA
The main advantage of trading using opposite SUPERC and PURA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUPERC position performs unexpectedly, PURA 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 PURA will offset losses from the drop in PURA's long position.The idea behind SUPERC and PURA 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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