Correlation Between NATIONAL INVESTMENT and SUN

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

By analyzing existing cross correlation between NATIONAL INVESTMENT TRUST and SUN LIMITED, you can compare the effects of market volatilities on NATIONAL INVESTMENT and SUN 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 NATIONAL INVESTMENT with a short position of SUN. Check out your portfolio center. Please also check ongoing floating volatility patterns of NATIONAL INVESTMENT and SUN.

Diversification Opportunities for NATIONAL INVESTMENT and SUN

0.27

Correlation Coefficient

NATIONAL INVESTMENT  SUN

Modest diversification

The 3 months correlation between NATIONAL and SUN is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding NATIONAL INVESTMENT TRUST and SUN LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUN LIMITED and NATIONAL INVESTMENT 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 NATIONAL INVESTMENT TRUST are associated (or correlated) with SUN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUN LIMITED has no effect on the direction of NATIONAL INVESTMENT i.e., NATIONAL INVESTMENT and SUN go up and down completely randomly.

Pair Corralation between NATIONAL INVESTMENT and SUN

Assuming the 90 days trading horizon NATIONAL INVESTMENT TRUST is expected to under-perform the SUN. In addition to that, NATIONAL INVESTMENT is 5.86 times more volatile than SUN LIMITED. It trades about -0.16 of its total potential returns per unit of risk. SUN LIMITED is currently generating about 0.4 per unit of volatility. If you would invest  4,000  in SUN LIMITED on October 14, 2024 and sell it today you would earn a total of  135.00  from holding SUN LIMITED or generate 3.38% return on investment over 90 days.

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

NATIONAL INVESTMENT TRUST  vs.  SUN LIMITED

NATIONAL INVESTMENT TRUST

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NATIONAL INVESTMENT TRUST has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, NATIONAL INVESTMENT is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SUN LIMITED

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SUN LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with NATIONAL INVESTMENT and SUN

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

The idea behind NATIONAL INVESTMENT TRUST and SUN 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.