Correlation Between Sunspring Metal and Newretail

Can any of the company-specific risk be diversified away by investing in both Sunspring Metal and Newretail 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 Sunspring Metal and Newretail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sunspring Metal Corp and Newretail Co, you can compare the effects of market volatilities on Sunspring Metal and Newretail 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 Sunspring Metal with a short position of Newretail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunspring Metal and Newretail.

Diversification Opportunities for Sunspring Metal and Newretail

-0.47

Correlation Coefficient

Sunspring Metal  Newretail

Very good diversification

The 3 months correlation between Sunspring and Newretail is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sunspring Metal Corp and Newretail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newretail and Sunspring Metal 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 Sunspring Metal Corp are associated (or correlated) with Newretail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newretail has no effect on the direction of Sunspring Metal i.e., Sunspring Metal and Newretail go up and down completely randomly.

Pair Corralation between Sunspring Metal and Newretail

Assuming the 90 days trading horizon Sunspring Metal is expected to generate 1.27 times less return on investment than Newretail. But when comparing it to its historical volatility, Sunspring Metal Corp is 1.92 times less risky than Newretail. It trades about 0.05 of its potential returns per unit of risk. Newretail Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,080  in Newretail Co on October 5, 2024 and sell it today you would earn a total of  370.00  from holding Newretail Co or generate 17.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Sunspring Metal Corp  vs.  Newretail Co

Sunspring Metal Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunspring Metal Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Newretail

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Newretail Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Newretail showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunspring Metal and Newretail

The main advantage of trading using opposite Sunspring Metal and Newretail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunspring Metal position performs unexpectedly, Newretail 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 Newretail will offset losses from the drop in Newretail's long position.

The idea behind Sunspring Metal Corp and Newretail Co 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.