Correlation Between Coreshares Index and Sun International

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

By analyzing existing cross correlation between Coreshares Index Tracker and Sun International, you can compare the effects of market volatilities on Coreshares Index and Sun International 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 Coreshares Index with a short position of Sun International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coreshares Index and Sun International.

Diversification Opportunities for Coreshares Index and Sun International

0.33

Correlation Coefficient

Coreshares Index  Sun International

Weak diversification

The 3 months correlation between Coreshares and Sun is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Coreshares Index Tracker and Sun International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun International and Coreshares Index 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 Coreshares Index Tracker are associated (or correlated) with Sun International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun International has no effect on the direction of Coreshares Index i.e., Coreshares Index and Sun International go up and down completely randomly.

Pair Corralation between Coreshares Index and Sun International

Assuming the 90 days trading horizon Coreshares Index Tracker is expected to generate 0.91 times more return on investment than Sun International. However, Coreshares Index Tracker is 1.1 times less risky than Sun International. It trades about 0.08 of its potential returns per unit of risk. Sun International is currently generating about -0.22 per unit of risk. If you would invest  111,400  in Coreshares Index Tracker on October 9, 2024 and sell it today you would earn a total of  1,400  from holding Coreshares Index Tracker or generate 1.26% return on investment over 90 days.

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

Coreshares Index Tracker  vs.  Sun International

Coreshares Index Tracker

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coreshares Index Tracker has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Coreshares Index is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Sun International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Sun International is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Coreshares Index and Sun International

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

The idea behind Coreshares Index Tracker and Sun International 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.