Correlation Between EM and SUN

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

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

Diversification Opportunities for EM and SUN

0.0

Correlation Coefficient

EM  SUN

Pay attention - limited upside

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

Pair Corralation between EM and SUN

If you would invest  1.72  in SUN on April 21, 2025 and sell it today you would earn a total of  0.16  from holding SUN or generate 9.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

EM  vs.  SUN

EM

Risk-Adjusted Performance

Very Weak

Over the last 90 days EM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, EM is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SUN

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SUN are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, SUN may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with EM and SUN

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

The idea behind EM and SUN 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.