Correlation Between SUN ART and ASSOC BR

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

By analyzing existing cross correlation between SUN ART RETAIL and ASSOC BR FOODS, you can compare the effects of market volatilities on SUN ART and ASSOC BR 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 ART with a short position of ASSOC BR. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUN ART and ASSOC BR.

Diversification Opportunities for SUN ART and ASSOC BR

-0.44

Correlation Coefficient

SUN ART  ASSOC BR

Very good diversification

The 3 months correlation between SUN and ASSOC is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding SUN ART RETAIL and ASSOC BR FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASSOC BR FOODS and SUN ART 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 ART RETAIL are associated (or correlated) with ASSOC BR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASSOC BR FOODS has no effect on the direction of SUN ART i.e., SUN ART and ASSOC BR go up and down completely randomly.

Pair Corralation between SUN ART and ASSOC BR

Assuming the 90 days trading horizon SUN ART RETAIL is expected to generate 2.51 times more return on investment than ASSOC BR. However, SUN ART is 2.51 times more volatile than ASSOC BR FOODS. It trades about 0.26 of its potential returns per unit of risk. ASSOC BR FOODS is currently generating about 0.04 per unit of risk. If you would invest  25.00  in SUN ART RETAIL on September 20, 2024 and sell it today you would earn a total of  6.00  from holding SUN ART RETAIL or generate 24.0% return on investment over 90 days.

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

SUN ART RETAIL  vs.  ASSOC BR FOODS

SUN ART RETAIL

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SUN ART RETAIL are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward indicators, SUN ART exhibited solid returns over the last few months and may actually be approaching a breakup point.

ASSOC BR FOODS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASSOC BR FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ASSOC BR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SUN ART and ASSOC BR

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

The idea behind SUN ART RETAIL and ASSOC BR FOODS 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.