Correlation Between Sun Country and GSX Techedu

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

By analyzing existing cross correlation between Sun Country Airlines and GSX Techedu, you can compare the effects of market volatilities on Sun Country and GSX Techedu 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 Country with a short position of GSX Techedu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and GSX Techedu.

Diversification Opportunities for Sun Country and GSX Techedu

0.0

Correlation Coefficient

Sun Country  GSX Techedu

Pay attention - limited upside

The 3 months correlation between Sun and GSX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and GSX Techedu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSX Techedu and Sun Country 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 Country Airlines are associated (or correlated) with GSX Techedu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSX Techedu has no effect on the direction of Sun Country i.e., Sun Country and GSX Techedu go up and down completely randomly.

Pair Corralation between Sun Country and GSX Techedu

If you would invest  1,244  in Sun Country Airlines on October 25, 2024 and sell it today you would earn a total of  443.00  from holding Sun Country Airlines or generate 35.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sun Country Airlines  vs.  GSX Techedu

Sun Country Airlines

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Country Airlines are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental indicators, Sun Country showed solid returns over the last few months and may actually be approaching a breakup point.

GSX Techedu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GSX Techedu has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, GSX Techedu is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sun Country and GSX Techedu

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

The idea behind Sun Country Airlines and GSX Techedu 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.