Correlation Between SUN and STEPN

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

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

Diversification Opportunities for SUN and STEPN

0.93

Correlation Coefficient

SUN  STEPN

Almost no diversification

The 3 months correlation between SUN and STEPN is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding SUN and STEPN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEPN and SUN 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 SUN are associated (or correlated) with STEPN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEPN has no effect on the direction of SUN i.e., SUN and STEPN go up and down completely randomly.

Pair Corralation between SUN and STEPN

Assuming the 90 days trading horizon SUN is expected to generate 0.81 times more return on investment than STEPN. However, SUN is 1.24 times less risky than STEPN. It trades about -0.11 of its potential returns per unit of risk. STEPN is currently generating about -0.25 per unit of risk. If you would invest  2.45  in SUN on December 28, 2024 and sell it today you would lose (0.82) from holding SUN or give up 33.47% of portfolio value over 90 days.

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

SUN  vs.  STEPN

SUN

Risk-Adjusted Performance

Very Weak

Over the last 90 days SUN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for SUN shareholders.

STEPN

Risk-Adjusted Performance

Very Weak

Over the last 90 days STEPN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for STEPN shareholders.

Pair Trading with SUN and STEPN

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

The idea behind SUN and STEPN 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.