Correlation Between Searchlight Minerals and Sun Summit

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

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

Diversification Opportunities for Searchlight Minerals and Sun Summit

0.67

Correlation Coefficient

Searchlight Minerals  Sun Summit

Poor diversification

The 3 months correlation between Searchlight and Sun is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Searchlight Minerals Corp and Sun Summit Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Summit Minerals and Searchlight Minerals 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 Searchlight Minerals Corp are associated (or correlated) with Sun Summit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Summit Minerals has no effect on the direction of Searchlight Minerals i.e., Searchlight Minerals and Sun Summit go up and down completely randomly.

Pair Corralation between Searchlight Minerals and Sun Summit

Given the investment horizon of 90 days Searchlight Minerals Corp is expected to generate 1.53 times more return on investment than Sun Summit. However, Searchlight Minerals is 1.53 times more volatile than Sun Summit Minerals. It trades about 0.09 of its potential returns per unit of risk. Sun Summit Minerals is currently generating about 0.06 per unit of risk. If you would invest  0.60  in Searchlight Minerals Corp on October 12, 2024 and sell it today you would lose (0.37) from holding Searchlight Minerals Corp or give up 61.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	87.5%
Values	Daily Returns

Searchlight Minerals Corp  vs.  Sun Summit Minerals

Searchlight Minerals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Searchlight Minerals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Searchlight Minerals is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Sun Summit Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Summit Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Searchlight Minerals and Sun Summit

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

The idea behind Searchlight Minerals Corp and Sun Summit Minerals 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.