Correlation Between Sui and PRO

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

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

Diversification Opportunities for Sui and PRO

0.6

Correlation Coefficient

Sui  PRO

Poor diversification

The 3 months correlation between Sui and PRO is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sui and PRO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PRO and Sui 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 Sui are associated (or correlated) with PRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PRO has no effect on the direction of Sui i.e., Sui and PRO go up and down completely randomly.

Pair Corralation between Sui and PRO

Assuming the 90 days trading horizon Sui is expected to generate 0.64 times more return on investment than PRO. However, Sui is 1.57 times less risky than PRO. It trades about 0.38 of its potential returns per unit of risk. PRO is currently generating about 0.08 per unit of risk. If you would invest  80.00  in Sui on August 30, 2024 and sell it today you would earn a total of  265.00  from holding Sui or generate 331.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Sui  vs.  PRO

Sui

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Sui are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Sui exhibited solid returns over the last few months and may actually be approaching a breakup point.

PRO

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Sui and PRO

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

The idea behind Sui and PRO 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.