Correlation Between Sui and ELEC

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

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

Diversification Opportunities for Sui and ELEC

0.41

Correlation Coefficient

Sui  ELEC

Very weak diversification

The 3 months correlation between Sui and ELEC is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sui and ELEC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELEC 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 ELEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELEC has no effect on the direction of Sui i.e., Sui and ELEC go up and down completely randomly.

Pair Corralation between Sui and ELEC

Assuming the 90 days trading horizon Sui is expected to generate 7.45 times less return on investment than ELEC. But when comparing it to its historical volatility, Sui is 2.29 times less risky than ELEC. It trades about 0.02 of its potential returns per unit of risk. ELEC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.02  in ELEC on February 3, 2025 and sell it today you would lose  0.00  from holding ELEC or give up 16.32% of portfolio value over 90 days.

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

Sui  vs.  ELEC

Sui

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sui are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Sui may actually be approaching a critical reversion point that can send shares even higher in June 2025.

ELEC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ELEC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, ELEC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sui and ELEC

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

The idea behind Sui and ELEC 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.