Correlation Between Azarga Metals and Sun Summit

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

By analyzing existing cross correlation between Azarga Metals Corp and Sun Summit Minerals, you can compare the effects of market volatilities on Azarga Metals and Sun Summit 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 Azarga Metals with a short position of Sun Summit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azarga Metals and Sun Summit.

Diversification Opportunities for Azarga Metals and Sun Summit

-0.46

Correlation Coefficient

Azarga Metals  Sun Summit

Very good diversification

The 3 months correlation between Azarga and Sun is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Azarga Metals Corp and Sun Summit Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Summit Minerals and Azarga Metals 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 Azarga Metals Corp are associated (or correlated) with Sun Summit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Summit Minerals has no effect on the direction of Azarga Metals i.e., Azarga Metals and Sun Summit go up and down completely randomly.

Pair Corralation between Azarga Metals and Sun Summit

Assuming the 90 days horizon Azarga Metals Corp is expected to generate 1.51 times more return on investment than Sun Summit. However, Azarga Metals is 1.51 times more volatile than Sun Summit Minerals. It trades about 0.08 of its potential returns per unit of risk. Sun Summit Minerals is currently generating about 0.05 per unit of risk. If you would invest  1.50  in Azarga Metals Corp on November 28, 2024 and sell it today you would earn a total of  0.40  from holding Azarga Metals Corp or generate 26.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.63%
Values	Daily Returns

Azarga Metals Corp  vs.  Sun Summit Minerals

Azarga Metals Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Azarga Metals Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Azarga Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Sun Summit Minerals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Summit Minerals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Sun Summit reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Azarga Metals and Sun Summit

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

The idea behind Azarga Metals Corp and Sun Summit Minerals 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.