Correlation Between Tokio Marine and Suncorp Group

Can any of the company-specific risk be diversified away by investing in both Tokio Marine and Suncorp Group 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 Tokio Marine and Suncorp Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tokio Marine Holdings and Suncorp Group Limited, you can compare the effects of market volatilities on Tokio Marine and Suncorp Group 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 Tokio Marine with a short position of Suncorp Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokio Marine and Suncorp Group.

Diversification Opportunities for Tokio Marine and Suncorp Group

0.65

Correlation Coefficient

Tokio Marine  Suncorp Group

Poor diversification

The 3 months correlation between Tokio and Suncorp is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Tokio Marine Holdings and Suncorp Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncorp Group Limited and Tokio Marine 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 Tokio Marine Holdings are associated (or correlated) with Suncorp Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suncorp Group Limited has no effect on the direction of Tokio Marine i.e., Tokio Marine and Suncorp Group go up and down completely randomly.

Pair Corralation between Tokio Marine and Suncorp Group

Assuming the 90 days horizon Tokio Marine Holdings is expected to generate 0.8 times more return on investment than Suncorp Group. However, Tokio Marine Holdings is 1.25 times less risky than Suncorp Group. It trades about 0.02 of its potential returns per unit of risk. Suncorp Group Limited is currently generating about -0.12 per unit of risk. If you would invest  3,431  in Tokio Marine Holdings on September 29, 2024 and sell it today you would earn a total of  12.00  from holding Tokio Marine Holdings or generate 0.35% return on investment over 90 days.

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

Tokio Marine Holdings  vs.  Suncorp Group Limited

Tokio Marine Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tokio Marine Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tokio Marine may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Suncorp Group Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Suncorp Group Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Suncorp Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Tokio Marine and Suncorp Group

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

The idea behind Tokio Marine Holdings and Suncorp Group Limited 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.