Correlation Between SUN LIFE and Sunny Optical

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

Diversification Opportunities for SUN LIFE and Sunny Optical

-0.51

Correlation Coefficient

SUN LIFE  Sunny Optical

Excellent diversification

The 3 months correlation between SUN and Sunny is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIFE FINANCIAL and Sunny Optical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Optical Technology 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 Sunny Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Optical Technology has no effect on the direction of SUN LIFE i.e., SUN LIFE and Sunny Optical go up and down completely randomly.

Pair Corralation between SUN LIFE and Sunny Optical

Assuming the 90 days trading horizon SUN LIFE FINANCIAL is expected to under-perform the Sunny Optical. But the stock apears to be less risky and, when comparing its historical volatility, SUN LIFE FINANCIAL is 2.87 times less risky than Sunny Optical. The stock trades about -0.09 of its potential returns per unit of risk. The Sunny Optical Technology is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  865.00  in Sunny Optical Technology on December 19, 2024 and sell it today you would earn a total of  140.00  from holding Sunny Optical Technology or generate 16.18% return on investment over 90 days.

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

SUN LIFE FINANCIAL  vs.  Sunny Optical Technology

SUN LIFE FINANCIAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days SUN LIFE FINANCIAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Sunny Optical Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Optical Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sunny Optical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SUN LIFE and Sunny Optical

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

The idea behind SUN LIFE FINANCIAL and Sunny Optical Technology 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..