Correlation Between SunOpta and Plum Acquisition

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

By analyzing existing cross correlation between SunOpta and Plum Acquisition Corp, you can compare the effects of market volatilities on SunOpta and Plum Acquisition 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 Plum Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunOpta and Plum Acquisition.

Diversification Opportunities for SunOpta and Plum Acquisition

-0.33

Correlation Coefficient

SunOpta  Plum Acquisition

Very good diversification

The 3 months correlation between SunOpta and Plum is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Plum Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plum Acquisition Corp 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 Plum Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plum Acquisition Corp has no effect on the direction of SunOpta i.e., SunOpta and Plum Acquisition go up and down completely randomly.

Pair Corralation between SunOpta and Plum Acquisition

Given the investment horizon of 90 days SunOpta is expected to under-perform the Plum Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, SunOpta is 1.22 times less risky than Plum Acquisition. The stock trades about -0.2 of its potential returns per unit of risk. The Plum Acquisition Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,100  in Plum Acquisition Corp on December 20, 2024 and sell it today you would lose (37.00) from holding Plum Acquisition Corp or give up 3.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	51.67%
Values	Daily Returns

SunOpta  vs.  Plum Acquisition Corp

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. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Plum Acquisition Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Plum Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking indicators, Plum Acquisition is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SunOpta and Plum Acquisition

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

The idea behind SunOpta and Plum Acquisition Corp 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.