Correlation Between GMX and SUN

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

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

Diversification Opportunities for GMX and SUN

0.95

Correlation Coefficient

GMX  SUN

Almost no diversification

The 3 months correlation between GMX and SUN is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding GMX and SUN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUN and GMX 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 GMX are associated (or correlated) with SUN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUN has no effect on the direction of GMX i.e., GMX and SUN go up and down completely randomly.

Pair Corralation between GMX and SUN

Assuming the 90 days trading horizon GMX is expected to under-perform the SUN. In addition to that, GMX is 1.29 times more volatile than SUN. It trades about -0.13 of its total potential returns per unit of risk. SUN is currently generating about -0.1 per unit of volatility. If you would invest  2.45  in SUN on December 28, 2024 and sell it today you would lose (0.79) from holding SUN or give up 32.24% of portfolio value over 90 days.

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

GMX  vs.  SUN

GMX

Risk-Adjusted Performance

Very Weak

Over the last 90 days GMX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for GMX shareholders.

SUN

Risk-Adjusted Performance

Very Weak

Over the last 90 days SUN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for SUN shareholders.

Pair Trading with GMX and SUN

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

The idea behind GMX and SUN 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.