Correlation Between Global Techs and Sun Pacific

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

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

Diversification Opportunities for Global Techs and Sun Pacific

-0.03

Correlation Coefficient

Global Techs  Sun Pacific

Good diversification

The 3 months correlation between Global and Sun is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Global Techs 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 Global Techs 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 Global Techs 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 Global Techs i.e., Global Techs and Sun Pacific go up and down completely randomly.

Pair Corralation between Global Techs and Sun Pacific

If you would invest  198.00  in Sun Pacific Holding on September 4, 2024 and sell it today you would earn a total of  3.00  from holding Sun Pacific Holding or generate 1.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Global Techs  vs.  Sun Pacific Holding

Global Techs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Techs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Global Techs is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Sun Pacific Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Pacific Holding are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sun Pacific showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Techs and Sun Pacific

The main advantage of trading using opposite Global Techs and Sun Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Techs 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 Global Techs 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.