Correlation Between Starr Peak and Sun Summit

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

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

Diversification Opportunities for Starr Peak and Sun Summit

-0.22

Correlation Coefficient

Starr Peak  Sun Summit

Very good diversification

The 3 months correlation between Starr and Sun is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Starr Peak Exploration 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 Starr Peak 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 Starr Peak Exploration 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 Starr Peak i.e., Starr Peak and Sun Summit go up and down completely randomly.

Pair Corralation between Starr Peak and Sun Summit

Assuming the 90 days horizon Starr Peak Exploration is expected to generate 0.53 times more return on investment than Sun Summit. However, Starr Peak Exploration is 1.89 times less risky than Sun Summit. It trades about 0.08 of its potential returns per unit of risk. Sun Summit Minerals is currently generating about 0.0 per unit of risk. If you would invest  24.00  in Starr Peak Exploration on December 27, 2024 and sell it today you would earn a total of  4.00  from holding Starr Peak Exploration or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Starr Peak Exploration  vs.  Sun Summit Minerals

Starr Peak Exploration

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Starr Peak Exploration are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Starr Peak reported solid returns over the last few months and may actually be approaching a breakup point.

Sun Summit Minerals

Risk-Adjusted Performance

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 nearly stable technical and fundamental indicators, Sun Summit is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Starr Peak and Sun Summit

The main advantage of trading using opposite Starr Peak and Sun Summit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starr Peak 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 Starr Peak Exploration 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.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.