Correlation Between Sun Summit and Arizona Metals

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

Diversification Opportunities for Sun Summit and Arizona Metals

-0.33

Correlation Coefficient

Sun Summit  Arizona Metals

Very good diversification

The 3 months correlation between Sun and Arizona is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sun Summit Minerals and Arizona Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arizona Metals Corp 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 Arizona Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arizona Metals Corp has no effect on the direction of Sun Summit i.e., Sun Summit and Arizona Metals go up and down completely randomly.

Pair Corralation between Sun Summit and Arizona Metals

Assuming the 90 days horizon Sun Summit Minerals is expected to generate 1.86 times more return on investment than Arizona Metals. However, Sun Summit is 1.86 times more volatile than Arizona Metals Corp. It trades about 0.01 of its potential returns per unit of risk. Arizona Metals Corp is currently generating about -0.01 per unit of risk. If you would invest  7.30  in Sun Summit Minerals on December 28, 2024 and sell it today you would lose (0.81) from holding Sun Summit Minerals or give up 11.1% of portfolio value over 90 days.

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

Sun Summit Minerals  vs.  Arizona Metals Corp

Sun Summit Minerals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Summit Minerals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Sun Summit may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Arizona Metals Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Sun Summit and Arizona Metals

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

The idea behind Sun Summit Minerals and Arizona Metals Corp 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.