Correlation Between Sui and BF

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

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

Diversification Opportunities for Sui and BF

0.37

Correlation Coefficient

Sui  BF

Weak diversification

The 3 months correlation between Sui and BF is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sui and BF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BF and Sui 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 Sui are associated (or correlated) with BF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BF has no effect on the direction of Sui i.e., Sui and BF go up and down completely randomly.

Pair Corralation between Sui and BF

Assuming the 90 days trading horizon Sui is expected to generate 2.91 times more return on investment than BF. However, Sui is 2.91 times more volatile than BF. It trades about -0.01 of its potential returns per unit of risk. BF is currently generating about -0.05 per unit of risk. If you would invest  349.00  in Sui on November 28, 2024 and sell it today you would lose (56.00) from holding Sui or give up 16.05% of portfolio value over 90 days.

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

Sui  vs.  BF

Sui

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sui has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Sui is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

BF

Risk-Adjusted Performance

Very Weak

Over the last 90 days BF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for BF shareholders.

Pair Trading with Sui and BF

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

The idea behind Sui and BF 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.