Correlation Between PT Bank and SUN LIFE

Can any of the company-specific risk be diversified away by investing in both PT Bank 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 PT Bank and SUN LIFE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Bank Rakyat and SUN LIFE FINANCIAL, you can compare the effects of market volatilities on PT Bank 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 PT Bank with a short position of SUN LIFE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and SUN LIFE.

Diversification Opportunities for PT Bank and SUN LIFE

-0.45

Correlation Coefficient

PT Bank  SUN LIFE

Very good diversification

The 3 months correlation between BYRA and SUN is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat 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 PT Bank 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 PT Bank Rakyat 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 PT Bank i.e., PT Bank and SUN LIFE go up and down completely randomly.

Pair Corralation between PT Bank and SUN LIFE

Assuming the 90 days trading horizon PT Bank Rakyat is expected to generate 7.68 times more return on investment than SUN LIFE. However, PT Bank is 7.68 times more volatile than SUN LIFE FINANCIAL. It trades about 0.03 of its potential returns per unit of risk. SUN LIFE FINANCIAL is currently generating about 0.06 per unit of risk. If you would invest  22.00  in PT Bank Rakyat on October 22, 2024 and sell it today you would earn a total of  0.00  from holding PT Bank Rakyat or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

PT Bank Rakyat  vs.  SUN LIFE FINANCIAL

PT Bank Rakyat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Rakyat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile 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.

SUN LIFE FINANCIAL

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SUN LIFE FINANCIAL are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, SUN LIFE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PT Bank and SUN LIFE

The main advantage of trading using opposite PT Bank and SUN LIFE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank 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 PT Bank Rakyat and SUN LIFE FINANCIAL 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.