Correlation Between Century Pacific and Sun Life
Can any of the company-specific risk be diversified away by investing in both Century Pacific and Sun Life 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 Century Pacific and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Pacific Food and Sun Life Financial, you can compare the effects of market volatilities on Century Pacific and Sun Life 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 Century Pacific with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Pacific and Sun Life.
Diversification Opportunities for Century Pacific and Sun Life
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Century and Sun is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Century Pacific Food and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial and Century Pacific 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 Century Pacific Food are associated (or correlated) with Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of Century Pacific i.e., Century Pacific and Sun Life go up and down completely randomly.
Pair Corralation between Century Pacific and Sun Life
Assuming the 90 days trading horizon Century Pacific is expected to generate 1.53 times less return on investment than Sun Life. But when comparing it to its historical volatility, Century Pacific Food is 1.56 times less risky than Sun Life. It trades about 0.06 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 273,375 in Sun Life Financial on August 25, 2024 and sell it today you would earn a total of 66,625 from holding Sun Life Financial or generate 24.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 83.15% |
| Values | Daily Returns |
Century Pacific Food vs. Sun Life Financial
Performance |
| Timeline |
| Century Pacific Food |
| Sun Life Financial |
Century Pacific and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Pacific and Sun Life
The main advantage of trading using opposite Century Pacific and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Pacific position performs unexpectedly, Sun Life 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 Life will offset losses from the drop in Sun Life's long position.| Century Pacific vs. RFM Corp | Century Pacific vs. Axelum Resources Corp | Century Pacific vs. Swift Foods |
| Sun Life vs. Manulife Financial Corp | Sun Life vs. National Reinsurance | Sun Life vs. Allhome Corp | Sun Life vs. Jollibee Foods Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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