Correlation Between Sun Lif and Hemisphere Energy

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

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

Diversification Opportunities for Sun Lif and Hemisphere Energy

-0.36

Correlation Coefficient

Sun Lif  Hemisphere Energy

Very good diversification

The 3 months correlation between Sun and Hemisphere is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sun Lif Non and Hemisphere Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hemisphere Energy and Sun Lif 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 Lif Non are associated (or correlated) with Hemisphere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hemisphere Energy has no effect on the direction of Sun Lif i.e., Sun Lif and Hemisphere Energy go up and down completely randomly.

Pair Corralation between Sun Lif and Hemisphere Energy

Assuming the 90 days trading horizon Sun Lif is expected to generate 1.97 times less return on investment than Hemisphere Energy. But when comparing it to its historical volatility, Sun Lif Non is 1.6 times less risky than Hemisphere Energy. It trades about 0.06 of its potential returns per unit of risk. Hemisphere Energy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  109.00  in Hemisphere Energy on September 4, 2024 and sell it today you would earn a total of  76.00  from holding Hemisphere Energy or generate 69.72% return on investment over 90 days.

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

Sun Lif Non  vs.  Hemisphere Energy

Sun Lif Non

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Lif Non has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Sun Lif is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Hemisphere Energy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hemisphere Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Hemisphere Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sun Lif and Hemisphere Energy

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

The idea behind Sun Lif Non and Hemisphere Energy 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.