Correlation Between TRON and SUNEX SA

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

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

Diversification Opportunities for TRON and SUNEX SA

-0.52

Correlation Coefficient

TRON  SUNEX SA

Excellent diversification

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

Pair Corralation between TRON and SUNEX SA

Assuming the 90 days trading horizon TRON is expected to generate 2.35 times more return on investment than SUNEX SA. However, TRON is 2.35 times more volatile than SUNEX SA. It trades about 0.08 of its potential returns per unit of risk. SUNEX SA is currently generating about -0.04 per unit of risk. If you would invest  6.57  in TRON on October 27, 2024 and sell it today you would earn a total of  18.43  from holding TRON or generate 280.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	60.69%
Values	Daily Returns

TRON  vs.  SUNEX SA

TRON

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TRON exhibited solid returns over the last few months and may actually be approaching a breakup point.

SUNEX SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SUNEX SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SUNEX SA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with TRON and SUNEX SA

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

The idea behind TRON and SUNEX SA 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.