Correlation Between Sun Vending and Forth Public

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

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

Diversification Opportunities for Sun Vending and Forth Public

0.88

Correlation Coefficient

Sun Vending  Forth Public

Very poor diversification

The 3 months correlation between Sun and Forth is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sun Vending Technology and Forth Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forth Public and Sun Vending 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 Vending Technology are associated (or correlated) with Forth Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forth Public has no effect on the direction of Sun Vending i.e., Sun Vending and Forth Public go up and down completely randomly.

Pair Corralation between Sun Vending and Forth Public

Assuming the 90 days trading horizon Sun Vending Technology is expected to generate 0.58 times more return on investment than Forth Public. However, Sun Vending Technology is 1.71 times less risky than Forth Public. It trades about -0.01 of its potential returns per unit of risk. Forth Public is currently generating about -0.02 per unit of risk. If you would invest  165.00  in Sun Vending Technology on October 8, 2024 and sell it today you would lose (10.00) from holding Sun Vending Technology or give up 6.06% of portfolio value over 90 days.

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

Sun Vending Technology  vs.  Forth Public

Sun Vending Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Vending Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Forth Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forth Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sun Vending and Forth Public

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

The idea behind Sun Vending Technology and Forth Public 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.