Correlation Between Sui and MOC

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

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

Diversification Opportunities for Sui and MOC

0.42

Correlation Coefficient

Sui  MOC

Very weak diversification

The 3 months correlation between Sui and MOC is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sui and MOC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOC 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 MOC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOC has no effect on the direction of Sui i.e., Sui and MOC go up and down completely randomly.

Pair Corralation between Sui and MOC

Assuming the 90 days trading horizon Sui is expected to generate 1.42 times less return on investment than MOC. But when comparing it to its historical volatility, Sui is 2.06 times less risky than MOC. It trades about 0.09 of its potential returns per unit of risk. MOC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6.54  in MOC on November 27, 2024 and sell it today you would earn a total of  1.09  from holding MOC or generate 16.67% return on investment over 90 days.

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

Sui  vs.  MOC

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.

MOC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MOC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, MOC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sui and MOC

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

The idea behind Sui and MOC 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.