Correlation Between Sun Peak and Leading Edge
Can any of the company-specific risk be diversified away by investing in both Sun Peak and Leading Edge 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 Sun Peak and Leading Edge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Peak Metals and Leading Edge Materials, you can compare the effects of market volatilities on Sun Peak and Leading Edge 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 Sun Peak with a short position of Leading Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Peak and Leading Edge.
Diversification Opportunities for Sun Peak and Leading Edge
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sun and Leading is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sun Peak Metals and Leading Edge Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leading Edge Materials and Sun Peak 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 Sun Peak Metals are associated (or correlated) with Leading Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leading Edge Materials has no effect on the direction of Sun Peak i.e., Sun Peak and Leading Edge go up and down completely randomly.
Pair Corralation between Sun Peak and Leading Edge
Assuming the 90 days trading horizon Sun Peak Metals is expected to under-perform the Leading Edge. But the stock apears to be less risky and, when comparing its historical volatility, Sun Peak Metals is 2.33 times less risky than Leading Edge. The stock trades about -0.01 of its potential returns per unit of risk. The Leading Edge Materials is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 9.00 in Leading Edge Materials on December 20, 2024 and sell it today you would earn a total of 20.00 from holding Leading Edge Materials or generate 222.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Sun Peak Metals vs. Leading Edge Materials
Performance |
Timeline |
Sun Peak Metals |
Leading Edge Materials |
Sun Peak and Leading Edge Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sun Peak and Leading Edge
The main advantage of trading using opposite Sun Peak and Leading Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Peak position performs unexpectedly, Leading Edge 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 Leading Edge will offset losses from the drop in Leading Edge's long position.Sun Peak vs. Bragg Gaming Group | Sun Peak vs. Rogers Communications | Sun Peak vs. Partners Value Investments | Sun Peak vs. Queens Road Capital |
Leading Edge vs. Hannan Metals | Leading Edge vs. Mkango Resources | Leading Edge vs. Elcora Advanced Materials | Leading Edge vs. Midnight Sun Mining |
Check out your portfolio center.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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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