Correlation Between Sun Life and BANK RAKYAT

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Can any of the company-specific risk be diversified away by investing in both Sun Life and BANK RAKYAT 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 BANK RAKYAT 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 BANK RAKYAT IND, you can compare the effects of market volatilities on Sun Life and BANK RAKYAT 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 BANK RAKYAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and BANK RAKYAT.

Diversification Opportunities for Sun Life and BANK RAKYAT

SunBANKDiversified AwaySunBANKDiversified Away100%
0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between Sun and BANK is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and BANK RAKYAT IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK RAKYAT IND 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 BANK RAKYAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK RAKYAT IND has no effect on the direction of Sun Life i.e., Sun Life and BANK RAKYAT go up and down completely randomly.

Pair Corralation between Sun Life and BANK RAKYAT

Assuming the 90 days horizon Sun Life Financial is expected to under-perform the BANK RAKYAT. In addition to that, Sun Life is 2.21 times more volatile than BANK RAKYAT IND. It trades about -0.15 of its total potential returns per unit of risk. BANK RAKYAT IND is currently generating about 0.21 per unit of volatility. If you would invest  23.00  in BANK RAKYAT IND on November 20, 2024 and sell it today you would earn a total of  1.00  from holding BANK RAKYAT IND or generate 4.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Sun Life Financial  vs.  BANK RAKYAT IND

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510
JavaScript chart by amCharts 3.21.15LIE BYRA
       Timeline  
Sun Life Financial 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Sun Life Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb53545556575859
BANK RAKYAT IND 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days BANK RAKYAT IND has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.230.2350.240.2450.250.2550.26

Sun Life and BANK RAKYAT Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.36-1.8-1.24-0.68-0.120.420.981.542.12.66 0.080.100.120.140.160.180.20
JavaScript chart by amCharts 3.21.15LIE BYRA
       Returns  

Pair Trading with Sun Life and BANK RAKYAT

The main advantage of trading using opposite Sun Life and BANK RAKYAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, BANK RAKYAT 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 BANK RAKYAT will offset losses from the drop in BANK RAKYAT's long position.
The idea behind Sun Life Financial and BANK RAKYAT IND 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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