Correlation Between Onano Industrial and Sunspring Metal

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

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

Diversification Opportunities for Onano Industrial and Sunspring Metal

0.49

Correlation Coefficient

Onano Industrial  Sunspring Metal

Very weak diversification

The 3 months correlation between Onano and Sunspring is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Onano Industrial Corp and Sunspring Metal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunspring Metal Corp and Onano Industrial 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 Onano Industrial Corp are associated (or correlated) with Sunspring Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunspring Metal Corp has no effect on the direction of Onano Industrial i.e., Onano Industrial and Sunspring Metal go up and down completely randomly.

Pair Corralation between Onano Industrial and Sunspring Metal

Assuming the 90 days trading horizon Onano Industrial Corp is expected to under-perform the Sunspring Metal. In addition to that, Onano Industrial is 1.0 times more volatile than Sunspring Metal Corp. It trades about -0.11 of its total potential returns per unit of risk. Sunspring Metal Corp is currently generating about -0.04 per unit of volatility. If you would invest  3,465  in Sunspring Metal Corp on December 22, 2024 and sell it today you would lose (175.00) from holding Sunspring Metal Corp or give up 5.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Onano Industrial Corp  vs.  Sunspring Metal Corp

Onano Industrial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Onano Industrial 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Sunspring Metal Corp

Risk-Adjusted Performance

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 fairly stable basic indicators, Sunspring Metal is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Onano Industrial and Sunspring Metal

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

The idea behind Onano Industrial Corp and Sunspring Metal Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..