Correlation Between IXUP and Summit Resources

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

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

Diversification Opportunities for IXUP and Summit Resources

-0.12

Correlation Coefficient

IXUP  Summit Resources

Good diversification

The 3 months correlation between IXUP and Summit is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding IXUP and Summit Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Resources and IXUP 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 IXUP are associated (or correlated) with Summit Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Resources has no effect on the direction of IXUP i.e., IXUP and Summit Resources go up and down completely randomly.

Pair Corralation between IXUP and Summit Resources

Assuming the 90 days trading horizon IXUP is expected to under-perform the Summit Resources. In addition to that, IXUP is 1.4 times more volatile than Summit Resources Limited. It trades about -0.02 of its total potential returns per unit of risk. Summit Resources Limited is currently generating about 0.05 per unit of volatility. If you would invest  1.10  in Summit Resources Limited on December 29, 2024 and sell it today you would earn a total of  0.10  from holding Summit Resources Limited or generate 9.09% return on investment over 90 days.

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

IXUP  vs.  Summit Resources Limited

IXUP

Risk-Adjusted Performance

Very Weak

Over the last 90 days IXUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Summit Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Resources Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Summit Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IXUP and Summit Resources

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

The idea behind IXUP and Summit Resources Limited 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.