Correlation Between SUN LIFE and Jenoptik

Can any of the company-specific risk be diversified away by investing in both SUN LIFE and Jenoptik 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 Jenoptik 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 Jenoptik AG, you can compare the effects of market volatilities on SUN LIFE and Jenoptik 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 Jenoptik. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUN LIFE and Jenoptik.

Diversification Opportunities for SUN LIFE and Jenoptik

-0.61

Correlation Coefficient

SUN LIFE  Jenoptik

Excellent diversification

The 3 months correlation between SUN and Jenoptik is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIFE FINANCIAL and Jenoptik AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jenoptik AG 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 Jenoptik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jenoptik AG has no effect on the direction of SUN LIFE i.e., SUN LIFE and Jenoptik go up and down completely randomly.

Pair Corralation between SUN LIFE and Jenoptik

Assuming the 90 days trading horizon SUN LIFE FINANCIAL is expected to under-perform the Jenoptik. But the stock apears to be less risky and, when comparing its historical volatility, SUN LIFE FINANCIAL is 2.64 times less risky than Jenoptik. The stock trades about -0.31 of its potential returns per unit of risk. The Jenoptik AG is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,160  in Jenoptik AG on October 10, 2024 and sell it today you would earn a total of  158.00  from holding Jenoptik AG or generate 7.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

SUN LIFE FINANCIAL  vs.  Jenoptik AG

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 fragile technical and fundamental indicators, SUN LIFE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Jenoptik AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jenoptik AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SUN LIFE and Jenoptik

The main advantage of trading using opposite SUN LIFE and Jenoptik positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUN LIFE position performs unexpectedly, Jenoptik 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 Jenoptik will offset losses from the drop in Jenoptik's long position.

The idea behind SUN LIFE FINANCIAL and Jenoptik AG 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.