Correlation Between Computer Modelling and Sun Life

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

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

Diversification Opportunities for Computer Modelling and Sun Life

0.02

Correlation Coefficient

Computer Modelling  Sun Life

Significant diversification

The 3 months correlation between Computer and Sun is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Computer Modelling Group 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 Computer Modelling 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 Computer Modelling Group 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 Computer Modelling i.e., Computer Modelling and Sun Life go up and down completely randomly.

Pair Corralation between Computer Modelling and Sun Life

Assuming the 90 days trading horizon Computer Modelling Group is expected to under-perform the Sun Life. In addition to that, Computer Modelling is 3.96 times more volatile than Sun Life Non. It trades about -0.03 of its total potential returns per unit of risk. Sun Life Non is currently generating about -0.02 per unit of volatility. If you would invest  1,660  in Sun Life Non on September 13, 2024 and sell it today you would lose (14.00) from holding Sun Life Non or give up 0.84% of portfolio value over 90 days.

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

Computer Modelling Group  vs.  Sun Life Non

Computer Modelling

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sun Life Non

Risk-Adjusted Performance

0 of 100

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Computer Modelling and Sun Life

The main advantage of trading using opposite Computer Modelling and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer Modelling 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 Computer Modelling Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.