Correlation Between Sun Pacific and INEO Tech

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

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

Diversification Opportunities for Sun Pacific and INEO Tech

0.0

Correlation Coefficient

Sun Pacific  INEO Tech

Pay attention - limited upside

The 3 months correlation between Sun and INEO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sun Pacific Holding and INEO Tech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INEO Tech Corp and Sun Pacific 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 Pacific Holding are associated (or correlated) with INEO Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INEO Tech Corp has no effect on the direction of Sun Pacific i.e., Sun Pacific and INEO Tech go up and down completely randomly.

Pair Corralation between Sun Pacific and INEO Tech

Given the investment horizon of 90 days Sun Pacific Holding is expected to generate 1.13 times more return on investment than INEO Tech. However, Sun Pacific is 1.13 times more volatile than INEO Tech Corp. It trades about 0.01 of its potential returns per unit of risk. INEO Tech Corp is currently generating about -0.03 per unit of risk. If you would invest  180.00  in Sun Pacific Holding on September 13, 2024 and sell it today you would lose (32.00) from holding Sun Pacific Holding or give up 17.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Sun Pacific Holding  vs.  INEO Tech Corp

Sun Pacific Holding

Risk-Adjusted Performance

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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.

INEO Tech Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INEO Tech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic 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.

Pair Trading with Sun Pacific and INEO Tech

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

The idea behind Sun Pacific Holding and INEO Tech Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .