Correlation Between SUN LIFE and GEELY AUTOMOBILE
Can any of the company-specific risk be diversified away by investing in both SUN LIFE and GEELY AUTOMOBILE 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 LIFE and GEELY AUTOMOBILE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SUN LIFE FINANCIAL and GEELY AUTOMOBILE, you can compare the effects of market volatilities on SUN LIFE and GEELY AUTOMOBILE 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 LIFE with a short position of GEELY AUTOMOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUN LIFE and GEELY AUTOMOBILE.
Diversification Opportunities for SUN LIFE and GEELY AUTOMOBILE
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SUN and GEELY is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIFE FINANCIAL and GEELY AUTOMOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEELY AUTOMOBILE and SUN LIFE 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 LIFE FINANCIAL are associated (or correlated) with GEELY AUTOMOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEELY AUTOMOBILE has no effect on the direction of SUN LIFE i.e., SUN LIFE and GEELY AUTOMOBILE go up and down completely randomly.
Pair Corralation between SUN LIFE and GEELY AUTOMOBILE
Assuming the 90 days trading horizon SUN LIFE FINANCIAL is expected to under-perform the GEELY AUTOMOBILE. But the stock apears to be less risky and, when comparing its historical volatility, SUN LIFE FINANCIAL is 1.79 times less risky than GEELY AUTOMOBILE. The stock trades about -0.14 of its potential returns per unit of risk. The GEELY AUTOMOBILE is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 176.00 in GEELY AUTOMOBILE on November 4, 2024 and sell it today you would earn a total of 3.00 from holding GEELY AUTOMOBILE or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SUN LIFE FINANCIAL vs. GEELY AUTOMOBILE
Performance |
| Timeline |
| SUN LIFE FINANCIAL |
| GEELY AUTOMOBILE |
SUN LIFE and GEELY AUTOMOBILE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SUN LIFE and GEELY AUTOMOBILE
The main advantage of trading using opposite SUN LIFE and GEELY AUTOMOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUN LIFE position performs unexpectedly, GEELY AUTOMOBILE 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 GEELY AUTOMOBILE will offset losses from the drop in GEELY AUTOMOBILE's long position.| SUN LIFE vs. Arrow Electronics | SUN LIFE vs. LG Electronics | SUN LIFE vs. INVITATION HOMES DL | SUN LIFE vs. STMicroelectronics NV |
| GEELY AUTOMOBILE vs. Daido Steel Co | GEELY AUTOMOBILE vs. Delta Electronics Public | GEELY AUTOMOBILE vs. COSMOSTEEL HLDGS | GEELY AUTOMOBILE vs. Samsung Electronics Co |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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