Correlation Between Sun Life and Guangdong Investment
Can any of the company-specific risk be diversified away by investing in both Sun Life and Guangdong Investment 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 Guangdong Investment 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 Guangdong Investment Limited, you can compare the effects of market volatilities on Sun Life and Guangdong Investment 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 Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Guangdong Investment.
Diversification Opportunities for Sun Life and Guangdong Investment
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sun and Guangdong is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment 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 Guangdong Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Investment has no effect on the direction of Sun Life i.e., Sun Life and Guangdong Investment go up and down completely randomly.
Pair Corralation between Sun Life and Guangdong Investment
Considering the 90-day investment horizon Sun Life Financial is expected to under-perform the Guangdong Investment. But the stock apears to be less risky and, when comparing its historical volatility, Sun Life Financial is 6.6 times less risky than Guangdong Investment. The stock trades about -0.11 of its potential returns per unit of risk. The Guangdong Investment Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. 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 |
Sun Life Financial vs. Guangdong Investment Limited
Performance |
| Timeline |
| Sun Life Financial |
| Guangdong Investment |
Sun Life and Guangdong Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Guangdong Investment
The main advantage of trading using opposite Sun Life and Guangdong Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Guangdong Investment 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 Guangdong Investment will offset losses from the drop in Guangdong Investment's long position.| Sun Life vs. Hartford Financial Services | Sun Life vs. Goosehead Insurance | Sun Life vs. International General Insurance | Sun Life vs. Enstar Group Limited |
| Guangdong Investment vs. Essential Utilities | Guangdong Investment vs. Guangdong Investment | Guangdong Investment vs. Anhui Conch Cement | Guangdong Investment vs. Beijing Enterprises Water |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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