Correlation Between CHINA HUARONG and Sun Life
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG 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 CHINA HUARONG and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA HUARONG ENERHD 50 and Sun Life Financial, you can compare the effects of market volatilities on CHINA HUARONG 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 CHINA HUARONG with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Sun Life.
Diversification Opportunities for CHINA HUARONG and Sun Life
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CHINA and Sun is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 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 CHINA HUARONG 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 CHINA HUARONG ENERHD 50 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 CHINA HUARONG i.e., CHINA HUARONG and Sun Life go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Sun Life
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to generate 36.27 times more return on investment than Sun Life. However, CHINA HUARONG is 36.27 times more volatile than Sun Life Financial. It trades about 0.13 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.1 per unit of risk. If you would invest 0.05 in CHINA HUARONG ENERHD 50 on September 20, 2024 and sell it today you would earn a total of 0.10 from holding CHINA HUARONG ENERHD 50 or generate 200.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. Sun Life Financial
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Sun Life Financial |
CHINA HUARONG and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Sun Life
The main advantage of trading using opposite CHINA HUARONG and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG 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.| CHINA HUARONG vs. Micron Technology | CHINA HUARONG vs. SCOTT TECHNOLOGY | CHINA HUARONG vs. VARIOUS EATERIES LS | CHINA HUARONG vs. MACOM Technology Solutions |
| Sun Life vs. Superior Plus Corp | Sun Life vs. SIVERS SEMICONDUCTORS AB | Sun Life vs. CHINA HUARONG ENERHD 50 | Sun Life vs. NORDIC HALIBUT AS |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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