Correlation Between Norra Metals and Sun Summit

Can any of the company-specific risk be diversified away by investing in both Norra 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 Norra 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 Norra Metals Corp and Sun Summit Minerals, you can compare the effects of market volatilities on Norra 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 Norra Metals with a short position of Sun Summit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norra Metals and Sun Summit.

Diversification Opportunities for Norra Metals and Sun Summit

0.0

Correlation Coefficient

Norra Metals  Sun Summit

Pay attention - limited upside

The 3 months correlation between Norra and Sun is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Norra 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 Norra 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 Norra 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 Norra Metals i.e., Norra Metals and Sun Summit go up and down completely randomly.

Pair Corralation between Norra Metals and Sun Summit

If you would invest  7.71  in Sun Summit Minerals on December 27, 2024 and sell it today you would lose (1.22) from holding Sun Summit Minerals or give up 15.82% of portfolio value over 90 days.

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

Norra Metals Corp  vs.  Sun Summit Minerals

Norra Metals Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Norra Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Norra Metals is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Sun Summit Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Summit Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Sun Summit is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Norra Metals and Sun Summit

The main advantage of trading using opposite Norra Metals and Sun Summit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norra 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 Norra 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.