Correlation Between Sui and VIDY

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

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

Diversification Opportunities for Sui and VIDY

0.37

Correlation Coefficient

Sui  VIDY

Weak diversification

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

Pair Corralation between Sui and VIDY

Assuming the 90 days trading horizon Sui is expected to generate 1.33 times less return on investment than VIDY. But when comparing it to its historical volatility, Sui is 2.14 times less risky than VIDY. It trades about 0.05 of its potential returns per unit of risk. VIDY is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.01  in VIDY on November 19, 2024 and sell it today you would lose (0.01) from holding VIDY or give up 89.16% 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.  VIDY

Sui

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sui are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Sui may actually be approaching a critical reversion point that can send shares even higher in March 2025.

VIDY

Risk-Adjusted Performance

Weak

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

Pair Trading with Sui and VIDY

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

The idea behind Sui and VIDY 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.