Correlation Between Summit Securities and SINCLAIRS HOTELS

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

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

Diversification Opportunities for Summit Securities and SINCLAIRS HOTELS

0.31

Correlation Coefficient

Summit Securities  SINCLAIRS HOTELS

Weak diversification

The 3 months correlation between Summit and SINCLAIRS is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Summit Securities Limited and SINCLAIRS HOTELS ORD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINCLAIRS HOTELS ORD and Summit Securities 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 Summit Securities Limited are associated (or correlated) with SINCLAIRS HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SINCLAIRS HOTELS ORD has no effect on the direction of Summit Securities i.e., Summit Securities and SINCLAIRS HOTELS go up and down completely randomly.

Pair Corralation between Summit Securities and SINCLAIRS HOTELS

Assuming the 90 days trading horizon Summit Securities Limited is expected to generate 1.34 times more return on investment than SINCLAIRS HOTELS. However, Summit Securities is 1.34 times more volatile than SINCLAIRS HOTELS ORD. It trades about 0.13 of its potential returns per unit of risk. SINCLAIRS HOTELS ORD is currently generating about -0.01 per unit of risk. If you would invest  80,120  in Summit Securities Limited on October 4, 2024 and sell it today you would earn a total of  220,090  from holding Summit Securities Limited or generate 274.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	49.45%
Values	Daily Returns

Summit Securities Limited  vs.  SINCLAIRS HOTELS ORD

Summit Securities

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Securities Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Summit Securities unveiled solid returns over the last few months and may actually be approaching a breakup point.

SINCLAIRS HOTELS ORD

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SINCLAIRS HOTELS ORD are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, SINCLAIRS HOTELS demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Summit Securities and SINCLAIRS HOTELS

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

The idea behind Summit Securities Limited and SINCLAIRS HOTELS ORD 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.