Correlation Between Sun Summit and Tinka Resources

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

By analyzing existing cross correlation between Sun Summit Minerals and Tinka Resources Limited, you can compare the effects of market volatilities on Sun Summit and Tinka Resources 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 Sun Summit with a short position of Tinka Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Summit and Tinka Resources.

Diversification Opportunities for Sun Summit and Tinka Resources

0.25

Correlation Coefficient

Sun Summit  Tinka Resources

Modest diversification

The 3 months correlation between Sun and Tinka is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sun Summit Minerals and Tinka Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tinka Resources and Sun Summit 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 Sun Summit Minerals are associated (or correlated) with Tinka Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tinka Resources has no effect on the direction of Sun Summit i.e., Sun Summit and Tinka Resources go up and down completely randomly.

Pair Corralation between Sun Summit and Tinka Resources

Assuming the 90 days horizon Sun Summit Minerals is expected to under-perform the Tinka Resources. In addition to that, Sun Summit is 1.64 times more volatile than Tinka Resources Limited. It trades about -0.04 of its total potential returns per unit of risk. Tinka Resources Limited is currently generating about -0.03 per unit of volatility. If you would invest  9.00  in Tinka Resources Limited on September 5, 2024 and sell it today you would lose (1.94) from holding Tinka Resources Limited or give up 21.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Sun Summit Minerals  vs.  Tinka Resources Limited

Sun Summit Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Summit Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Tinka Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tinka Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Sun Summit and Tinka Resources

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

The idea behind Sun Summit Minerals and Tinka Resources 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..