Correlation Between US Nuclear and Sun Pacific

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

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

Diversification Opportunities for US Nuclear and Sun Pacific

-0.23

Correlation Coefficient

US Nuclear  Sun Pacific

Very good diversification

The 3 months correlation between UCLE and Sun is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding US Nuclear Corp and Sun Pacific Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Pacific Holding and US Nuclear 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 US Nuclear Corp are associated (or correlated) with Sun Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Pacific Holding has no effect on the direction of US Nuclear i.e., US Nuclear and Sun Pacific go up and down completely randomly.

Pair Corralation between US Nuclear and Sun Pacific

Given the investment horizon of 90 days US Nuclear Corp is expected to generate 6.27 times more return on investment than Sun Pacific. However, US Nuclear is 6.27 times more volatile than Sun Pacific Holding. It trades about 0.21 of its potential returns per unit of risk. Sun Pacific Holding is currently generating about -0.11 per unit of risk. If you would invest  2.40  in US Nuclear Corp on September 27, 2024 and sell it today you would earn a total of  5.10  from holding US Nuclear Corp or generate 212.5% return on investment over 90 days.

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

US Nuclear Corp  vs.  Sun Pacific Holding

US Nuclear Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US Nuclear Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, US Nuclear exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sun Pacific Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Pacific Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sun Pacific is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with US Nuclear and Sun Pacific

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

The idea behind US Nuclear Corp and Sun Pacific Holding 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.