Correlation Between SUN ART and SIMS METAL

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

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

Diversification Opportunities for SUN ART and SIMS METAL

0.39

Correlation Coefficient

SUN ART  SIMS METAL

Weak diversification

The 3 months correlation between SUN and SIMS is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding SUN ART RETAIL and SIMS METAL MGT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMS METAL MGT and SUN ART 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 SUN ART RETAIL are associated (or correlated) with SIMS METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMS METAL MGT has no effect on the direction of SUN ART i.e., SUN ART and SIMS METAL go up and down completely randomly.

Pair Corralation between SUN ART and SIMS METAL

Assuming the 90 days trading horizon SUN ART RETAIL is expected to generate 2.41 times more return on investment than SIMS METAL. However, SUN ART is 2.41 times more volatile than SIMS METAL MGT. It trades about 0.11 of its potential returns per unit of risk. SIMS METAL MGT is currently generating about 0.16 per unit of risk. If you would invest  21.00  in SUN ART RETAIL on April 24, 2025 and sell it today you would earn a total of  5.00  from holding SUN ART RETAIL or generate 23.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

SUN ART RETAIL  vs.  SIMS METAL MGT

SUN ART RETAIL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SUN ART RETAIL are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward indicators, SUN ART exhibited solid returns over the last few months and may actually be approaching a breakup point.

SIMS METAL MGT

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SIMS METAL MGT are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, SIMS METAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SUN ART and SIMS METAL

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

The idea behind SUN ART RETAIL and SIMS METAL MGT 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.