Correlation Between Sun Summit and Starr Peak

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

Diversification Opportunities for Sun Summit and Starr Peak

-0.04

Correlation Coefficient

Sun Summit  Starr Peak

Good diversification

The 3 months correlation between Sun and Starr is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sun Summit Minerals and Starr Peak Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starr Peak Exploration 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 Starr Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starr Peak Exploration has no effect on the direction of Sun Summit i.e., Sun Summit and Starr Peak go up and down completely randomly.

Pair Corralation between Sun Summit and Starr Peak

Assuming the 90 days horizon Sun Summit Minerals is expected to generate 2.98 times more return on investment than Starr Peak. However, Sun Summit is 2.98 times more volatile than Starr Peak Exploration. It trades about 0.05 of its potential returns per unit of risk. Starr Peak Exploration is currently generating about 0.01 per unit of risk. If you would invest  11.00  in Sun Summit Minerals on December 1, 2024 and sell it today you would lose (2.65) from holding Sun Summit Minerals or give up 24.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	71.66%
Values	Daily Returns

Sun Summit Minerals  vs.  Starr Peak Exploration

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.

Starr Peak Exploration

Risk-Adjusted Performance

Very Weak

Over the last 90 days Starr Peak Exploration 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 basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sun Summit and Starr Peak

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

The idea behind Sun Summit Minerals and Starr Peak Exploration 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.