Correlation Between Sparx Technology and SunOpta

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

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

Diversification Opportunities for Sparx Technology and SunOpta

0.83

Correlation Coefficient

Sparx Technology  SunOpta

Very poor diversification

The 3 months correlation between Sparx and SunOpta is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sparx Technology and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta and Sparx Technology 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 Sparx Technology are associated (or correlated) with SunOpta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunOpta has no effect on the direction of Sparx Technology i.e., Sparx Technology and SunOpta go up and down completely randomly.

Pair Corralation between Sparx Technology and SunOpta

Assuming the 90 days trading horizon Sparx Technology is expected to generate 1.42 times more return on investment than SunOpta. However, Sparx Technology is 1.42 times more volatile than SunOpta. It trades about -0.12 of its potential returns per unit of risk. SunOpta is currently generating about -0.26 per unit of risk. If you would invest  2,769  in Sparx Technology on December 30, 2024 and sell it today you would lose (750.00) from holding Sparx Technology or give up 27.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.88%
Values	Daily Returns

Sparx Technology  vs.  SunOpta

Sparx Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sparx Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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.

Pair Trading with Sparx Technology and SunOpta

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

The idea behind Sparx Technology and SunOpta 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.