Correlation Between TRADEGATE and SUN ART

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

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

Diversification Opportunities for TRADEGATE and SUN ART

0.1

Correlation Coefficient

TRADEGATE  SUN ART

Average diversification

The 3 months correlation between TRADEGATE and SUN is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding TRADEGATE and SUN ART RETAIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUN ART RETAIL and TRADEGATE 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 TRADEGATE are associated (or correlated) with SUN ART. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUN ART RETAIL has no effect on the direction of TRADEGATE i.e., TRADEGATE and SUN ART go up and down completely randomly.

Pair Corralation between TRADEGATE and SUN ART

Assuming the 90 days trading horizon TRADEGATE is expected to under-perform the SUN ART. But the stock apears to be less risky and, when comparing its historical volatility, TRADEGATE is 16.49 times less risky than SUN ART. The stock trades about -0.12 of its potential returns per unit of risk. The SUN ART RETAIL is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  25.00  in SUN ART RETAIL on September 23, 2024 and sell it today you would earn a total of  6.00  from holding SUN ART RETAIL or generate 24.0% return on investment over 90 days.

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

TRADEGATE  vs.  SUN ART RETAIL

TRADEGATE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRADEGATE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, TRADEGATE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

SUN ART RETAIL

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SUN ART RETAIL are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, SUN ART exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TRADEGATE and SUN ART

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

The idea behind TRADEGATE and SUN ART RETAIL 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.