Correlation Between Sun Summit and Pampa Metals

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

Diversification Opportunities for Sun Summit and Pampa Metals

-0.28

Correlation Coefficient

Sun Summit  Pampa Metals

Very good diversification

The 3 months correlation between Sun and Pampa is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sun Summit Minerals and Pampa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Metals 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 Pampa Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Metals has no effect on the direction of Sun Summit i.e., Sun Summit and Pampa Metals go up and down completely randomly.

Pair Corralation between Sun Summit and Pampa Metals

Assuming the 90 days horizon Sun Summit Minerals is expected to generate 1.33 times more return on investment than Pampa Metals. However, Sun Summit is 1.33 times more volatile than Pampa Metals. It trades about -0.01 of its potential returns per unit of risk. Pampa Metals is currently generating about -0.04 per unit of risk. If you would invest  18.00  in Sun Summit Minerals on August 30, 2024 and sell it today you would lose (8.50) from holding Sun Summit Minerals or give up 47.22% 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.  Pampa Metals

Sun Summit Minerals

Risk-Adjusted Performance

0 of 100

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 fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pampa Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pampa Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Pampa 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 Pampa Metals

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

The idea behind Sun Summit Minerals and Pampa Metals 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.