Correlation Between SUN and MUA

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

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

Diversification Opportunities for SUN and MUA

0.07

Correlation Coefficient

SUN  MUA

Significant diversification

The 3 months correlation between SUN and MUA is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIMITED and MUA LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MUA LTD and SUN 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 LIMITED are associated (or correlated) with MUA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MUA LTD has no effect on the direction of SUN i.e., SUN and MUA go up and down completely randomly.

Pair Corralation between SUN and MUA

Assuming the 90 days trading horizon SUN LIMITED is expected to generate 0.86 times more return on investment than MUA. However, SUN LIMITED is 1.16 times less risky than MUA. It trades about 0.05 of its potential returns per unit of risk. MUA LTD is currently generating about -0.04 per unit of risk. If you would invest  3,545  in SUN LIMITED on April 25, 2025 and sell it today you would earn a total of  265.00  from holding SUN LIMITED or generate 7.48% return on investment over 90 days.

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

SUN LIMITED  vs.  MUA LTD

SUN LIMITED

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SUN LIMITED are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, SUN may actually be approaching a critical reversion point that can send shares even higher in August 2025.

MUA LTD

Risk-Adjusted Performance

Very Weak

Over the last 90 days MUA LTD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with SUN and MUA

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

The idea behind SUN LIMITED and MUA LTD 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.