Correlation Between Sunstone Hotel and USU Software

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

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

Diversification Opportunities for Sunstone Hotel and USU Software

-0.06

Correlation Coefficient

Sunstone Hotel  USU Software

Good diversification

The 3 months correlation between Sunstone and USU is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and USU Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USU Software AG and Sunstone Hotel 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 Sunstone Hotel Investors are associated (or correlated) with USU Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USU Software AG has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and USU Software go up and down completely randomly.

Pair Corralation between Sunstone Hotel and USU Software

Assuming the 90 days horizon Sunstone Hotel Investors is expected to generate 0.31 times more return on investment than USU Software. However, Sunstone Hotel Investors is 3.2 times less risky than USU Software. It trades about 0.06 of its potential returns per unit of risk. USU Software AG is currently generating about -0.13 per unit of risk. If you would invest  708.00  in Sunstone Hotel Investors on April 21, 2025 and sell it today you would earn a total of  52.00  from holding Sunstone Hotel Investors or generate 7.34% return on investment over 90 days.

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

Sunstone Hotel Investors  vs.  USU Software AG

Sunstone Hotel Investors

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sunstone Hotel Investors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sunstone Hotel may actually be approaching a critical reversion point that can send shares even higher in August 2025.

USU Software AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days USU Software AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sunstone Hotel and USU Software

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

The idea behind Sunstone Hotel Investors and USU Software AG 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.