Correlation Between Suncorp and High Tech

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

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

Diversification Opportunities for Suncorp and High Tech

0.69

Correlation Coefficient

Suncorp  High Tech

Poor diversification

The 3 months correlation between Suncorp and High is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Suncorp Group and High Tech Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Tech Metals and Suncorp 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 Suncorp Group are associated (or correlated) with High Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Tech Metals has no effect on the direction of Suncorp i.e., Suncorp and High Tech go up and down completely randomly.

Pair Corralation between Suncorp and High Tech

Assuming the 90 days trading horizon Suncorp Group is expected to generate 0.35 times more return on investment than High Tech. However, Suncorp Group is 2.87 times less risky than High Tech. It trades about 0.1 of its potential returns per unit of risk. High Tech Metals is currently generating about 0.0 per unit of risk. If you would invest  1,071  in Suncorp Group on October 4, 2024 and sell it today you would earn a total of  830.00  from holding Suncorp Group or generate 77.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.8%
Values	Daily Returns

Suncorp Group  vs.  High Tech Metals

Suncorp Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Suncorp Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Suncorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

High Tech Metals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in High Tech Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, High Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Suncorp and High Tech

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

The idea behind Suncorp Group and High Tech Metals 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.