Correlation Between Superior Plus and StrikePoint Gold

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

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

Diversification Opportunities for Superior Plus and StrikePoint Gold

-0.13

Correlation Coefficient

Superior Plus  StrikePoint Gold

Good diversification

The 3 months correlation between Superior and StrikePoint is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and StrikePoint Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StrikePoint Gold and Superior Plus 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 Superior Plus Corp are associated (or correlated) with StrikePoint Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StrikePoint Gold has no effect on the direction of Superior Plus i.e., Superior Plus and StrikePoint Gold go up and down completely randomly.

Pair Corralation between Superior Plus and StrikePoint Gold

Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the StrikePoint Gold. But the stock apears to be less risky and, when comparing its historical volatility, Superior Plus Corp is 3.29 times less risky than StrikePoint Gold. The stock trades about -0.05 of its potential returns per unit of risk. The StrikePoint Gold is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  16.00  in StrikePoint Gold on September 17, 2024 and sell it today you would lose (6.45) from holding StrikePoint Gold or give up 40.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Superior Plus Corp  vs.  StrikePoint Gold

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

StrikePoint Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StrikePoint Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Superior Plus and StrikePoint Gold

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

The idea behind Superior Plus Corp and StrikePoint Gold 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.