Correlation Between Ontex Group and Sun Country

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

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

Diversification Opportunities for Ontex Group and Sun Country

-0.22

Correlation Coefficient

Ontex Group  Sun Country

Very good diversification

The 3 months correlation between Ontex and Sun is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ontex Group NV and Sun Country Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Country Airlines and Ontex Group 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 Ontex Group NV are associated (or correlated) with Sun Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Country Airlines has no effect on the direction of Ontex Group i.e., Ontex Group and Sun Country go up and down completely randomly.

Pair Corralation between Ontex Group and Sun Country

Assuming the 90 days horizon Ontex Group NV is expected to under-perform the Sun Country. But the pink sheet apears to be less risky and, when comparing its historical volatility, Ontex Group NV is 2.79 times less risky than Sun Country. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Sun Country Airlines is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,433  in Sun Country Airlines on December 18, 2024 and sell it today you would lose (80.00) from holding Sun Country Airlines or give up 5.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Ontex Group NV  vs.  Sun Country Airlines

Ontex Group NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ontex Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Sun Country Airlines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Country Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Sun Country is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ontex Group and Sun Country

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

The idea behind Ontex Group NV and Sun Country Airlines 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.