Correlation Between Sui and IQ

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

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

Diversification Opportunities for Sui and IQ

0.88

Correlation Coefficient

Sui  IQ

Very poor diversification

The 3 months correlation between Sui and IQ is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sui and IQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ 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 IQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ has no effect on the direction of Sui i.e., Sui and IQ go up and down completely randomly.

Pair Corralation between Sui and IQ

Assuming the 90 days trading horizon Sui is expected to generate 1.36 times more return on investment than IQ. However, Sui is 1.36 times more volatile than IQ. It trades about 0.38 of its potential returns per unit of risk. IQ is currently generating about 0.22 per unit of risk. If you would invest  80.00  in Sui on August 30, 2024 and sell it today you would earn a total of  265.00  from holding Sui or generate 331.25% return on investment over 90 days.

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

Sui  vs.  IQ

Sui

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Sui are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Sui exhibited solid returns over the last few months and may actually be approaching a breakup point.

IQ

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IQ are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, IQ exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sui and IQ

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

The idea behind Sui and IQ 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.