Correlation Between Mind Technology and Sunoco

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Can any of the company-specific risk be diversified away by investing in both Mind Technology and Sunoco 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 Mind Technology and Sunoco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mind Technology and Sunoco LP 6, you can compare the effects of market volatilities on Mind Technology and Sunoco 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 Mind Technology with a short position of Sunoco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mind Technology and Sunoco.

Diversification Opportunities for Mind Technology and Sunoco

-0.1
  Correlation Coefficient

Good diversification

The 3 months correlation between Mind and Sunoco is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Mind Technology and Sunoco LP 6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunoco LP 6 and Mind Technology 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 Mind Technology are associated (or correlated) with Sunoco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunoco LP 6 has no effect on the direction of Mind Technology i.e., Mind Technology and Sunoco go up and down completely randomly.

Pair Corralation between Mind Technology and Sunoco

Given the investment horizon of 90 days Mind Technology is expected to generate 6.69 times more return on investment than Sunoco. However, Mind Technology is 6.69 times more volatile than Sunoco LP 6. It trades about 0.11 of its potential returns per unit of risk. Sunoco LP 6 is currently generating about 0.04 per unit of risk. If you would invest  325.00  in Mind Technology on September 5, 2024 and sell it today you would earn a total of  52.00  from holding Mind Technology or generate 16.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.31%
ValuesDaily Returns

Mind Technology  vs.  Sunoco LP 6

 Performance 
       Timeline  
Mind Technology 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Mind Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Mind Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.
Sunoco LP 6 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Sunoco LP 6 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sunoco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Mind Technology and Sunoco Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mind Technology and Sunoco

The main advantage of trading using opposite Mind Technology and Sunoco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mind Technology position performs unexpectedly, Sunoco 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 Sunoco will offset losses from the drop in Sunoco's long position.
The idea behind Mind Technology and Sunoco LP 6 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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