Correlation Between Sui and ABYSS

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

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

Diversification Opportunities for Sui and ABYSS

0.94

Correlation Coefficient

Sui  ABYSS

Almost no diversification

The 3 months correlation between Sui and ABYSS is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Sui and ABYSS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABYSS 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 ABYSS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABYSS has no effect on the direction of Sui i.e., Sui and ABYSS go up and down completely randomly.

Pair Corralation between Sui and ABYSS

Assuming the 90 days trading horizon Sui is expected to generate 2.1 times more return on investment than ABYSS. However, Sui is 2.1 times more volatile than ABYSS. It trades about 0.31 of its potential returns per unit of risk. ABYSS is currently generating about 0.19 per unit of risk. If you would invest  102.00  in Sui on August 23, 2024 and sell it today you would earn a total of  250.00  from holding Sui or generate 245.1% return on investment over 90 days.

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

Sui  vs.  ABYSS

Sui

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sui are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Sui exhibited solid returns over the last few months and may actually be approaching a breakup point.

ABYSS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ABYSS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, ABYSS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sui and ABYSS

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

The idea behind Sui and ABYSS 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.