Correlation Between Sun Summit and Adriatic Metals

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

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

Diversification Opportunities for Sun Summit and Adriatic Metals

0.23

Correlation Coefficient

Sun Summit  Adriatic Metals

Modest diversification

The 3 months correlation between Sun and Adriatic is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sun Summit Minerals and Adriatic Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adriatic Metals PLC and Sun Summit 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 Summit Minerals are associated (or correlated) with Adriatic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adriatic Metals PLC has no effect on the direction of Sun Summit i.e., Sun Summit and Adriatic Metals go up and down completely randomly.

Pair Corralation between Sun Summit and Adriatic Metals

Assuming the 90 days horizon Sun Summit Minerals is expected to generate 3.37 times more return on investment than Adriatic Metals. However, Sun Summit is 3.37 times more volatile than Adriatic Metals PLC. It trades about 0.05 of its potential returns per unit of risk. Adriatic Metals PLC is currently generating about 0.08 per unit of risk. If you would invest  7.97  in Sun Summit Minerals on December 2, 2024 and sell it today you would earn a total of  0.38  from holding Sun Summit Minerals or generate 4.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.85%
Values	Daily Returns

Sun Summit Minerals  vs.  Adriatic Metals PLC

Sun Summit Minerals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Summit Minerals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Sun Summit reported solid returns over the last few months and may actually be approaching a breakup point.

Adriatic Metals PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Adriatic Metals PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Adriatic Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sun Summit and Adriatic Metals

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

The idea behind Sun Summit Minerals and Adriatic Metals PLC 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.