Correlation Between SUNation Energy and DEFSEC Technologies

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

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

Diversification Opportunities for SUNation Energy and DEFSEC Technologies

0.65

Correlation Coefficient

SUNation Energy  DEFSEC Technologies

Poor diversification

The 3 months correlation between SUNation and DEFSEC is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding SUNation Energy and DEFSEC Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEFSEC Technologies and SUNation Energy 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 SUNation Energy are associated (or correlated) with DEFSEC Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEFSEC Technologies has no effect on the direction of SUNation Energy i.e., SUNation Energy and DEFSEC Technologies go up and down completely randomly.

Pair Corralation between SUNation Energy and DEFSEC Technologies

Given the investment horizon of 90 days SUNation Energy is expected to under-perform the DEFSEC Technologies. But the stock apears to be less risky and, when comparing its historical volatility, SUNation Energy is 1.32 times less risky than DEFSEC Technologies. The stock trades about -0.02 of its potential returns per unit of risk. The DEFSEC Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  320.00  in DEFSEC Technologies on September 16, 2025 and sell it today you would earn a total of  9.00  from holding DEFSEC Technologies or generate 2.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

SUNation Energy  vs.  DEFSEC Technologies

SUNation Energy

Risk-Adjusted Performance

Weakest

Over the last 90 days SUNation Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

DEFSEC Technologies

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in DEFSEC Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, DEFSEC Technologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SUNation Energy and DEFSEC Technologies

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

The idea behind SUNation Energy and DEFSEC Technologies 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.