Correlation Between Andlauer Healthcare and Sun Life

Can any of the company-specific risk be diversified away by investing in both Andlauer Healthcare 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 Andlauer Healthcare and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Andlauer Healthcare Gr and Sun Life Non, you can compare the effects of market volatilities on Andlauer Healthcare 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 Andlauer Healthcare with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andlauer Healthcare and Sun Life.

Diversification Opportunities for Andlauer Healthcare and Sun Life

0.78

Correlation Coefficient

Andlauer Healthcare  Sun Life

Poor diversification

The 3 months correlation between Andlauer and Sun is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Andlauer Healthcare Gr and Sun Life Non in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Non and Andlauer Healthcare 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 Andlauer Healthcare Gr 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 Non has no effect on the direction of Andlauer Healthcare i.e., Andlauer Healthcare and Sun Life go up and down completely randomly.

Pair Corralation between Andlauer Healthcare and Sun Life

Assuming the 90 days trading horizon Andlauer Healthcare Gr is expected to under-perform the Sun Life. In addition to that, Andlauer Healthcare is 2.07 times more volatile than Sun Life Non. It trades about -0.04 of its total potential returns per unit of risk. Sun Life Non is currently generating about 0.01 per unit of volatility. If you would invest  1,689  in Sun Life Non on December 30, 2024 and sell it today you would earn a total of  6.00  from holding Sun Life Non or generate 0.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Andlauer Healthcare Gr  vs.  Sun Life Non

Andlauer Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Andlauer Healthcare Gr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Andlauer Healthcare is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Sun Life Non

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Life Non has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Sun Life is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Andlauer Healthcare and Sun Life

The main advantage of trading using opposite Andlauer Healthcare and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Andlauer Healthcare 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.

The idea behind Andlauer Healthcare Gr and Sun Life Non 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.