Correlation Between SunOpta and Data Communications

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

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

Diversification Opportunities for SunOpta and Data Communications

0.2

Correlation Coefficient

SunOpta  Data Communications

Modest diversification

The 3 months correlation between SunOpta and Data is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Data Communications Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Communications and SunOpta 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 SunOpta are associated (or correlated) with Data Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Communications has no effect on the direction of SunOpta i.e., SunOpta and Data Communications go up and down completely randomly.

Pair Corralation between SunOpta and Data Communications

Assuming the 90 days trading horizon SunOpta is expected to under-perform the Data Communications. But the stock apears to be less risky and, when comparing its historical volatility, SunOpta is 1.27 times less risky than Data Communications. The stock trades about -0.22 of its potential returns per unit of risk. The Data Communications Management is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  208.00  in Data Communications Management on December 21, 2024 and sell it today you would lose (14.00) from holding Data Communications Management or give up 6.73% of portfolio value over 90 days.

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

SunOpta  vs.  Data Communications Management

SunOpta

Risk-Adjusted Performance

Very Weak

Over the last 90 days SunOpta has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Data Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Data Communications Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Data Communications is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SunOpta and Data Communications

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

The idea behind SunOpta and Data Communications Management 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.