Correlation Between Sunstone Hotel and Datametrex

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

By analyzing existing cross correlation between Sunstone Hotel Investors and Datametrex AI Limited, you can compare the effects of market volatilities on Sunstone Hotel and Datametrex 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 Sunstone Hotel with a short position of Datametrex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Datametrex.

Diversification Opportunities for Sunstone Hotel and Datametrex

0.23

Correlation Coefficient

Sunstone Hotel  Datametrex

Modest diversification

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

Pair Corralation between Sunstone Hotel and Datametrex

Assuming the 90 days horizon Sunstone Hotel Investors is expected to under-perform the Datametrex. But the stock apears to be less risky and, when comparing its historical volatility, Sunstone Hotel Investors is 143.85 times less risky than Datametrex. The stock trades about -0.24 of its potential returns per unit of risk. The Datametrex AI Limited is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  7.20  in Datametrex AI Limited on December 24, 2024 and sell it today you would lose (2.34) from holding Datametrex AI Limited or give up 32.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Sunstone Hotel Investors  vs.  Datametrex AI Limited

Sunstone Hotel Investors

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sunstone Hotel Investors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Datametrex AI Limited

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Datametrex AI Limited are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Datametrex reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunstone Hotel and Datametrex

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

The idea behind Sunstone Hotel Investors and Datametrex AI Limited 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.