Correlation Between Sun Pacific and Appswarm

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

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

Diversification Opportunities for Sun Pacific and Appswarm

0.23

Correlation Coefficient

Sun Pacific  Appswarm

Modest diversification

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

Pair Corralation between Sun Pacific and Appswarm

Given the investment horizon of 90 days Sun Pacific Holding is expected to under-perform the Appswarm. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sun Pacific Holding is 3.93 times less risky than Appswarm. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Appswarm is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Appswarm on September 27, 2024 and sell it today you would lose (0.01) from holding Appswarm or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sun Pacific Holding  vs.  Appswarm

Sun Pacific Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Appswarm

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Appswarm are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Appswarm displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sun Pacific and Appswarm

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

The idea behind Sun Pacific Holding and Appswarm 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.