Correlation Between SUN and Velo

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

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

Diversification Opportunities for SUN and Velo

0.52

Correlation Coefficient

SUN  Velo

Very weak diversification

The 3 months correlation between SUN and Velo is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SUN and Velo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Velo 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 Velo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Velo has no effect on the direction of SUN i.e., SUN and Velo go up and down completely randomly.

Pair Corralation between SUN and Velo

Assuming the 90 days trading horizon SUN is expected to under-perform the Velo. But the crypto coin apears to be less risky and, when comparing its historical volatility, SUN is 1.15 times less risky than Velo. The crypto coin trades about -0.01 of its potential returns per unit of risk. The Velo is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1.66  in Velo on September 3, 2024 and sell it today you would earn a total of  0.27  from holding Velo or generate 16.27% return on investment over 90 days.

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

SUN  vs.  Velo

SUN

Risk-Adjusted Performance

0 of 100

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 rather sound basic indicators, SUN is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Velo

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Velo are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Velo exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SUN and Velo

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

The idea behind SUN and Velo 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..