Correlation Between Guangdong Investment and Sun Life
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment 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 Guangdong Investment and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangdong Investment Limited and Sun Life Financial, you can compare the effects of market volatilities on Guangdong Investment 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 Guangdong Investment with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Sun Life.
Diversification Opportunities for Guangdong Investment and Sun Life
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Guangdong and Sun is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited 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 Guangdong Investment 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 Guangdong Investment Limited 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 Guangdong Investment i.e., Guangdong Investment and Sun Life go up and down completely randomly.
Pair Corralation between Guangdong Investment and Sun Life
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 6.6 times more return on investment than Sun Life. However, Guangdong Investment is 6.6 times more volatile than Sun Life Financial. It trades about 0.15 of its potential returns per unit of risk. Sun Life Financial is currently generating about -0.11 per unit of risk. If you would invest 61.00 in Guangdong Investment Limited on October 28, 2024 and sell it today you would earn a total of 19.00 from holding Guangdong Investment Limited or generate 31.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Investment Limited vs. Sun Life Financial
Performance |
| Timeline |
| Guangdong Investment |
| Sun Life Financial |
Guangdong Investment and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and Sun Life
The main advantage of trading using opposite Guangdong Investment and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment 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.| Guangdong Investment vs. Essential Utilities | Guangdong Investment vs. Guangdong Investment | Guangdong Investment vs. Anhui Conch Cement | Guangdong Investment vs. Beijing Enterprises Water |
| Sun Life vs. Hartford Financial Services | Sun Life vs. Goosehead Insurance | Sun Life vs. International General Insurance | Sun Life vs. Enstar Group Limited |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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